Online fraud warning to all e-commerce users

Increased fraud, loss of privacy and poor quality networks are just a few of the prices consumers will pay for a networked world, according to two Silicon valley experts

Online fraud has long been the hot topic, although hard statistics on how much is going on are difficult to come by. Elci Gos is the director of business development for GN Nettest -- a company that monitors and tests the networks of companies like BT (quote: BT.A), France Telecom and Cable & Wireless (quote: CW).

He has a stark warning for consumers using the Net for e-commerce. "Be afraid, be very afraid," he says. He believes the network operators are as unsure of the scale of online fraud as the public. "No one on the carrier side or the Internet side has a clear picture of how to prevent fraud or monitor and troubleshoot security," he says.

"Only deal with companies with 32 bit encryption, multiple password protection and who change passwords regularly," he advises. Very few companies meet this criteria he adds.

In the US, the FBI claims that 98 percent of hacking is internal to a company, forcing firms to keep a closer eye on what employees are doing. Gos believes, as more and more companies network via the Internet, employees will lose their right to privacy.

"Our devices are used to fire people," he says. "Employers want realtime surveillance to monitor who is on the Net and how much time they spend there. The Internet has taken away our privacy," he says.

As companies networks get bigger and more complex, there will be some major data crashes in the coming year Gos predicts. "There will be a lot of data catastrophes which will cause major havoc for consumers," he says. Stock exchanges and merged telcos will be the first to go down he claims.

While voice networks are generally regarded as far more stable than data ones, new technology is bringing new problems here as well, according to Tim Montgomery, president of telecommunication equipment vendor firm Ditech.

"As wireless and voice over IP technologies introduce delay into the network, voice quality can deteriorate quickly," he says. Increased echo -- where callers hear their own voice on the line -- is just one of the problems he predicts.

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