Electronic Currency......

Today, cash is known in various forms as a means of exchange and of storing value. Electronic currency is refers to money or scrip which is exchanged only electronically. Electronic currency is essentially a system of representation of debits and credits used to exchanged value that allows a person to pay for goods and services by transmitting a number from one computer to another. Electronic currency is also known as electronic money, electronic cash, e-money, digital money, digital cash, digital currency, internet currency, cybercash or cyberbucks. Money in the 21st century will surely prove to be as different from the money of the current century as our money is from that of the previous century. Electronic currency has been widely use through the world, just as electronic currency replace the paper money and coins, electronically initiated debits and credits will become the popular payments modes nowadays. New development in electronic currency is emerging, as a result such as smartcards, online banking, electronic currency are being use to discuss money.


Nearly all of the deposit currencies in the world's banking systems are handled electronically through a series of interbank computer networks. Although banks have been able to move currency electronically for almost 10 years, but only recently has the average consumer had the capability to use electronic transfers in any meaningful way. Thus, the increasing of the power of communication technology and decreasing cost of computer, these factors make the digital transfer of funds a reality for million individuals around the world. Beside that, the internet and e-commerce have become an increasingly commercial area, where daily payments for buying goods, service or informations online.


As there, electronic payments are becoming the central part to online business between seller and buyer. Compare to electreonic currency, traditional payments method include credit card, debit card and charge card. However, these traditional payments method have posed problems to both seller and buyer. Not all of the merchant accept credit card payment transaction because the credit card companies may charged the merchants a 2 to 6 percent of service fee for each transaction, so this will cause the merchant to gain more lowest profits.


Using electronic currency is like using a virtual ATM. A users simply connects to the internet and verifies the ownership of the account. The user may then withdraw the desired amount of the electronic currency. By this, the bank issues a large, unique random number in an electronic coin format to the user, which the bank signs with the private key. The user's software stores these electronic coins on the hard drive on the computer. Many systems will sell their electronic currency directly to the end user, such as Paypal and Webmoney, but other systems such as e-gold, sell only through third party digital currency exchangers.


While, electronic currency have its advantages and diasdvantages on the payments system.

Advantages of electronic currency paymant systems:

Confidentiality/Privacy

One of the most attractive features of electronic currency is that, unlike real cash, it is anonymous. That is, when a electronic currency amount is sent from a customer to a merchant, there is no way to obtain information about the customer. This is one significant difference between electronic currency and credit card systems. Unlike credit card companies that collect a customer's spending habits and sell this data to third parties, the bank will have no record of the customer involved in the electronic currency transaction. Thus, by using electronic currency, the bank is unable to obtain personal information about the consumer. Therefore, this protects the privacy rights of the customer.

Security

The security of electronic currency is provided by the use of encryption. Some experts are weary about the security of online transactions. However, it use of break the code of a digital signature to a longer key. Additionally, the enacted digital signature statutes require a certification authority to use a trustworthy system. Therefore, even though there is speculation about the security of the Internet, electronic currency consumers are probably more secure in their transactions than the more traditional ways of doing business.

Disadvantages of electronic currency payment systems:


Fraud

A major disadvantage to electronic currency is fraud. If a consumer somehow misplaces his private key to withdraw funds, the bank would never know and the consumer would be liable. Credit cards on the other hand, limit the consumer's liability for unauthorized activity. Additionally, if the security code is broken and the message is intercepted, the hacker will be able to perpetrate fraud on the recipient of the message. Thus, although fraud is a potential drawback of electronic currency, this risk is no greater than the traditional forms of payment.

Peer-to-peer double spending

Double spending of digital coins is another potential disadvantage of electronic currency. However, this is only a potential drawback if the consumer chooses a peer-to-peer transaction. In all other transactions in the electronic currency system, the bank is able to check the serial number of each coin in a transaction against its database of spent coins, and if the coin has been spent, the transaction will be denied.

Conclusion

Although digital cash can provide many benefits such as convenience and privacy, increased efficiency of transactions, lower transaction fees, new business opportunities with the expansion of economic activities on the Internet, there are many potential issues with the use of digital cash. The transfer of digital currencies raises local issues such as how to levy taxes or the possible ease of money laudering. There are also potential macroeconomic effects such as exchange rate instabilities and shortage of money supplies (total amount of digital cash versus total amount of real cash available, basically the possibility that digital cash could exceed the real cash available).


In conclusion, electronic currency is at the early stages of implementation. As we progress into the 21st century, a consumer's wallet will hold less paper cash, coins and magnetic strip cards. Instead, smart cards, will contain electronic currency and other financial information that will automatically execute a transaction. In the physical world, consumers will gain immediate access to public transportation, concerts and movie theaters using smart cards. Additionally, a cyberspace mall will allow all entrepreneurs and retailers the ability to instantly reach the global market. Yet, the major issues will continue to be trust and security in ensuring consumers that the chance of a fraudulent transaction or misuse of personal information is slim or non-existent. However, once the electronic currency industry is able to ensure consumers that these transactions are secure and trustworthy, it will change the way we conduct our daily lives.

Credit Card debts: Causes and Prevention.

Facts on Credit Card

First, let us try to understand how this wonderful plastic card works. It provides you with a line of credit, which is the maximum you can charge to the card. As you make purchases, the available credit line decreases. When you receive your monthly statement, you have the flexibility to either pay off the whole amount, or pay only the minimum amount due (which is strongly not encouraged). When monthly payments are made to the card-issuing bank, the amount of credit line available is then restored. However, many consumers typically pay only the interest and a bare-minimum amount of principal and thus never fully repay the entire sum.

How do people find themselves caught in such circumstances? For many young people, running up debt begins innocently enough. Upon entering college, many of these college students are given that little plastic card, “subbed” from their parents’ credit cards. Oh, there are just so many things that they “need” to buy (for e.g. a new pair of branded shoes & clothes, i-Pods, a cool bag & matching accessories etc.) and just too many parties & clubbing sessions that they “need” to attend! Calling their folks for extra money every now and then is just too much hassle (and”waste’ of money for the cost of phone calls). It’s so much easier to just – Charge It!

With the implied promise of high-paying jobs in the near future, many students enter the credit world thinking their debt will disappear as quickly as it was acquired—in just a few years after graduation. Regrettably, most graduating students find reality to be much different from their naive expectations. Continuing to charge more than they can comfortably repay, many find themselves in a spending trap, in which rising debt matches or exceeds rising incomes. 

Young people, of course, are not the only ones caught in such financial circumstances. Many adults have likewise given in to the allure of easy credit. Advertisers tell us we "deserve" their new and improved products—and most of us willingly believe them. The desire to enjoy life to the fullest with the latest entertainment, clothes and gadgets can be irresistible. People can also be trapped into the vortex of credit card debt via unemployment. If one has no savings, adding debt to one's credit cards is often the quickest way to cover basic living expenses. However, then, when they do secure a new job, many find their credit cards at maximum limit, and repayment schedules become a severe burden.

Although most of us don't like to consider negative possibilities, we cannot avoid financial disasters by simply ignoring reality. Economic downturns inevitably push more people to the edge of financial disaster. Only those who have taken precautions or avoided precarious situations survive. What can you do to avoid becoming a sad statistic?

 

We live in a world where debt is not only acceptable, it is the norm. Almost everyone you meet has debt of some kind. So, in a society that views debt as a way of life, how can we control our debt instead of allowing it to control us?

 

Causes of credit card debt:

Interest

The interest is the money paid on a balance to a lender by the borrower, which is to be paid every month, if you roll over your balance from month to month. Interest does not usually go down on its own, and when only minimum payments are made, your balance can grow to un-manageable amounts. If you are late on a payment, your interest rates can increase to 35 percent, making it very hard to pay off balances. With interest rates still on the rise, there is no better time to take a good close look at your finances.

Payment

Debt, especially credit card debt can accumulate very fast and many people soon find themselves barely able to even make the minimum payments. Remember if you are late on only one payment, your rate could increase drastically. If you are not good at remembering payments, it is wise to set up direct debits to pay your credit card bills. It is always best to control your spending and try to pay more than the required minimum payment whenever possible.

The main problem with credit cards is that they make it very easy for you to spend money. The most important step take to reduce credit card debt is to not use your credit card for every little thing, use cash whenever possible.

Studies show credit card debt is higher for males than female debtors are, and even higher for joint accounts. The problem with carrying credit card debt is that the interest on the card will typically accrue much quicker when you only make minimum payments.

Prevention:

The first thing to do when considering your debt is to make a budget. It is important to have a plan for your money so that you will know exactly where all of your funds are going. Many people believe that a budget will be constricting and not allow them any freedom. Really the opposite is true. A budget allows you the freedom of having peace of mind knowing that all of your bills are paid and the money has been allocated ahead of time for these expenses.

Knowing where to start when making your budget can be overwhelming. The best place to begin is to make a list of all of your income. Once you have listed your income, make a list of all of your bills. Be sure to include things like cable, internet, cell phone, electricity, water, credit cards, loan payments, and any others that you might have on a monthly basis. Things like trash that are normally billed on a quarterly basis should also be included by dividing the normal bill by 3 to get the monthly total. Once you have listed all of your bills, consider living expenses. Things like gas, groceries, laundry, personal care, entertainment, and spending money should all be budgeted into your plan.

It is also important to have a savings plan. This is key to help you prevent yourself from getting into debt. Set aside a certain amount each month into a savings account. It can just be for general savings, or you could set a goal to save up for a big purchase. Saving with a goal in mind motivates many people to stick to their savings plan. They know that at the end they will be able to purchase the desired object without going into debt.

If you already have debt, it can be advantageous to take some steps to help manage it. If you have a high amount of credit card debt, it can be wise to consolidate it into one loan. If you are a homeowner, using the equity you have accumulated in your home is often the wisest way to restructure your debt load. You can roll all of your debt into one loan and make one payment that has tax advantages. It is wise to talk to your financial institution about all of the options they have for you.

Another way to manage existing debt is to consolidate your debt into one payment using an unsecured loan. Although the rates will be higher than a secured loan, often it will be lower than your credit card rates and the payment will be lower as well. This will allow you to pay off your debt in a specified time while paying less interest over the long run.

There are many practical ways to manage the debt you already have while preventing yourself from getting in any deeper. Make a logical, practical budget and consolidate your existing debt in order.

 

The application of pre-paid cash card for consumers

Have you ever stood behind someone in line at the store and watched him shuffle through a stack of what must be at least 10 prepaid cards? ?Touch'N Go card, smart card, credit card, debit card….

Prepaid cards are one of the newest and most interesting financial products on the market, and they are something that everyone should be made aware of.

Many of us have prepaid phone cards or SIM cards for our mobiles, but prepaid debit cards are quite a new idea. However, the concept is the same as other prepaid mediums, where you load money onto a card and then you can spend this money at retailers or withdraw the money at an ATM. You load money onto the card using cash, bank transfer or another card.

Prepaid cards are neither credit nor debit cards, but have features similar to both. These are VISA or MasterCard cards usually, and so have the wide usage and security features of a credit card. However, you are not borrowing money, simply using your own money to top up a card and spend on it. They are a financial product that falls in between debit and credit cards.

Touch 'n Go card is an electronic purse that can be used at all highways in Malaysia, major public transports in Klang Valley, selected parking sites and theme park.

Touch 'n Go uses contactless smartcard technology. The card looks similar to a credit card. User can continue using the card as long as it is pre-loaded with electronic cash. User can reload the card at toll plazas, train stations, Automated Teller Machines, Cash Deposit Machines, Petrol kiosks and at authorised third party outlets. Reload denomination is ranging from RM20 to RM500.

Touch ‘n Go enhances the speed of paying for low value but high frequency transactions. Apart from the speed, it is also very convenient because user no longer need to prepare for small change or wait in queue at the cash lane to complete the transaction.

Links to Touch'N Go : http://www.touchngo.com.my/index.jsp

Octopus Card was launched in Hong Kong on year 1997, September. It is a rechargeable contactless stored value smart card to transfer electronic payments in online in offline system. It is widely used in payment system for transportation, supermarkets, fast food restaurant, car parks and other pint of sale application such as service station s and vending machines that have achieved good outcomes.

Links to Hong Kong Octopus Card: http://www.octopuscards.com/

The Application for pre-paid cash card

The prepaid cash card is of use in several ways, namely:

1. Pay bill – Rent, utilities, insurance, car payment, and cell phone bills can be paid instantly.

2. Shop anywhere as long as the card using is accepted at different retailers, buys fuel at the pump, pay by phone, and shop on the Internet.

3. Get cash at ATMs, any time of the day, and any day of the week.

4. Transfer money – For some prepaid cash card they provide the convenient such as send or receive money via bank wire transfers, between two cards.

5.Pay for toll– use Touch n' Go card as an example, it can be used at all highways in Malaysia, major public transports in Klang Valley, selected parking sites and theme park

6.E-identification – Smart cards storing personal information. For example: Malaysian Identity Card, Malaysian International passport.

7. Health care – Smart card stores health data about patient, allergies, past medical records.


Other than as mentioned above, prepaid cash cards can be used as a replacement for travellers’ cash. Customers buy prepaid debit cards denominated in the currency of destination, and then use them to withdraw cash at ATMs or pay for goods or services. It is indeed a great way to carry prepaid cash card, carry prepaid cash card as we travel is much safer and more secure than carrying around large amounts of cash.

References:

http://tranceboundaries.blogspot.com/2008/06/application-of-prepaid-cash-card-for.html

http://ezinearticles.com/?Advantages-And-Disadvantages-Of-A-Prepaid-Card&id=372866

http://www.howstuffworks.com/question332.htm

http://ecommercesite.wordpress.com/2008/06/27/the-application-of-pre-paid-cash-card-for-consumers-2/

The Application of 3rd Party Certification Programme in Malaysia.







Third parties are called certificate authorities (CAs), who issue digital certificate to operate as a trusted thrid party to verification that your websites does indeed represent your company. The most famous application of 3rd party certificate programme in Malaysia provided by the MSC Trustgate.com Sdn. Bhd. It was established in 1999 as a licensed Certificate Authority (CA) operating out of the Multimedia Super Corridor in Malaysia under Digital Signature Act 1997 (DSA).


MSC Trustgate.com Sdn. Bhd. offers complete security solutions for individuals, organizations, government and e-coommerce service providers by digital certificates encryption and decyption. Furthermore, instead of MSC Trustgate was provide security solutions, its also provide trusted services to help companies build a secure network and application infrastructure for their electronic transactions and communications over the network.


Trustgate provide digital certification services such as digital certificates, cryptographic products and software development. The products and services of Trustgate are SSL Certificate, Managed PKI, Personal ID, MyTRUST, SSL VPN, Managed Security Services, Verisign Certificated Training and Application Development.The objective of Trustgate is to secure the open network communications from both logally and across the ASEAN region. Besides that, the vision of MSC Trustgate is to enable organizations to conduct their business securely over the internet, as much as what they have been enjoying in the physical world.

Except of MSC Trustgate, Verisign Secure Site is use to ensure data confidentiality and integrity, it leading Secure Sockets Layer (SSL) Certificate Authority which also enabling the security of e-commerce, communications and interactions for websites, intranets and extranets. It provides security solutions to protect an organization's consumers, brand, website and network. By Verisign, all information transmitted through Internet is encrypted using the 128-bit SSL protocol. SSL is a secure way of transferring information between 2 computer on the Internet using encyption. Strong end to end encyption is also adopted within the bank's computer networks and resources.

Verisign infrastructure helps organizations to deliver in the Any Era and realize the maximum profit. It is also towards that goal that we focus our company, our technology, our services and our people. It helps companies and consumers all over the world to engage in trusted communications and commerce.

Why is the third party certification needed? It is because over the network nowadays, there are many threats of internet security spreading. For example, the increasing of the phishing through the Internet, so consumers want to make sure that whether they are dealing business with a trusted party. They are afraid of their personal information such as ID numder, Identity Card number, password, credit cards number and so on, will be sent and use by another people to do for illegal things. Thus the certification of 3rd party is needed to ensure their information cross over the Internet reaches the intended recipients and it is safe.

In additions, 3rd party certification is needed because they can provide e-email protection and validation, secure online shopping and others in order to avoid being spammed, hacked and attacked by viruses. By applying of 3rd party certification, there are more safeguard to people for online to do many things. Beside that, the consumers confidentiality towards the Internet will increases and the company will earn more profits.

How to safeguard our personal and financial data

Only about half of the people who are victimized by id theft can say how it happed, such as by having their wallet stolen. The rest of the identity theft cases could be caused bu thieves stealing electronic data or it could be from thieves stealing information from the trash. What is clear is that, with the growing threat of identify theft, consumers need to be alert and proactive protect themselves or at least lover the odds of being victimized. There are a number of steps that consumers can take.

 

1. Shared old documents. One of the best ways you can protect yourself against potential fraud or identity theft is to eliminate your own paper trail. A basic desktop shredder will work for a few sheets at a time, but for large quantities you may want to contact a commercial shredder who will also handle household needs.

 

2. Use a credit card with a small limit for mail order and online purchases. It's all too easy for a dishonest sales clerk to use your credit card information. If the card you use for these purchases has a low credit limit, at least thieves won't be able to rack up many bills before hitting a wall.

 

3. Get it in writing. Require anyone who solicits you over the phone to first send their information by mail, so you can check its legitimacy.

 

4. Review your monthly statements. Like flossing your teeth, this is a simple thing you can do to ward off calamity, yet it's surprising how many folks neglect to do it. Not only will reviewing your monthly statements alert you to possible fraudulent charges, you may also find legitimate charges for services that are either redundant or no longer necessary. For example, a close friend of mine realized she had been paying for two MIA memberships, one under her maiden name and one under her married name -- for two years! Lesson learned.

 

5. Prepare for disaster. With the recent anniversaries of Tsunami on Dec 26^th , it's more important than ever to make sure you safeguard your family's important documents in case of a disaster.

·                                 Keep a box of emergency supplies on hand that includes copies of your important documents in sealable plastic bags.

·                                 Purchase a fireproof safe for temporary protection of your valuables.

·                                 Rent a safety deposit box for another set of your important papers. Consider choosing a location outside of your immediate vicinity, in case the disaster affects the entire community.

·                                 Include in your important papers a copy of your household inventory, preferably with a videotape.

 

6. Choose your PIN wisely. While you want to choose something you'll remember, you don't want it to be something that a clever thief could figure out just by learning your birth date or your child's name. A combination of uppercase and lowercase letters, numbers, and symbols will offer you more security.

 

7. Guard your Social Security number. Make sure that anyone asking for your Social Security number really needs it. Often businesses that ask for a Social Security number can use an alternative customer identification number if you ask. Make sure not to print your Social Security number on checks or in other highly visible places.

 

8. Opt yourself out of all pre-approved credit card offers. If your mailbox is anything like ours, it's littered with pre-approved credit offers and cash-advance checks, all of which could spell disaster in the hands of the unscrupulous.

 

9. Bevigilant while using the Internet. As the victim of phishing  myself, I can't stress this enough. All it takes is one lapse of judgment, and you may find your accounts drained and your credit tarnished. Independently verify the validity of any requests for personal information before you give out any of your sensitive data.

 

10. Protect your computer's security. Use as many tools as you can (anti-virus software, spyware, firewalls, and passwords) to guard your computer information from the nefarious. Failing to protect your computer is just as bad as leaving your door unlocked, your windows wide open, and a sign on the mat, saying, "Burglars, come on in."

No need to make the thieves' jobs any easier. Though they are not foolproof, these simple tips will help ensure that your financial data is a whole lot safer.

http://www.fool.com/personal-finance/general/2006/09/23/safeguard-your-financial-life.aspx

http://www.edebtsolutions.org/identity-theft-protection/identity-theft-protection.php

The threat of online security : How safe is our data?

Nowadays, people rely on computers to create, store and manage critical information. Consequently, it is important for users to aware that computer security plays a major role in protecting their data from loss, damage, and misuse. Similarly, online security has been online trader’s main concern in protecting their websites from potential threats, such as phishing, security hacking, information theft, virus, worms and etc.

However, the increasingly developed technologies sarcastically increase the risk every computer user faced. Everyone who owns a computer with internet connection is able to equip themselves with ‘hacking’ knowledge by making some research online. Internet provides the opportunities for users to share the knowledge without filtering the content. Therefore, everyone can learn skills that may jeopardize online security via internet and therefore increase the online security risk.

There are a lot of threats surrounding and saturated in the website by the hackers. Technically, one of the most common threats is the use of malicious software in tracking and exploiting the trust and confidential information in between the transaction.

Cyber attacks or vulnerabilities fall under several general categories:

I. Malicious attacks

ii. Computer viruses

iii. Online fraud

iv. Identity theft

v. Data theft

I. MALICIOUS ATTACKS

Attacks that specifically aim to do harm are known as premeditated or malicious attacks. They can be further broken down into attacks caused by malicious code and those caused by intentional misrepresentation. Misrepresentation is most often seen with regard to on line fraud and identity theft (see below). Malicious code, on the other hand, is at the root of so-called "crackings" and "hackings" - notable examples of which include computer viruses, data theft, and Denial of Service (DOS) attacks.

ii.Computer Viruses

The most common form of malicious code is a computer virus -- a program or a fragment of code that replicates by attaching copies of itself to other programs. There are four main classes of viruses:

1. The first class consists of file infectors, which imbed themselves into ordinary executable files and attach to other system executables when the file is run.

2. The second category is system or boot-record infectors, which infect the first sector on a driver from which the operating system is booted-up. These viruses are not as prevalent now that floppy disks are less frequently used.

3. The third group of viruses is called macro viruses, which infect data files that include scripting "macros".

4. Finally, viruses that use more than one attack method are called multi-part viruses.

1.Worm

It's a malicious software which is a stand alone application. It's often designed to propagate through a network, rather than just a single computer. When your computer is infect of worm, computer will slow starting or slow running. It'll also face unexpected or frequent system failures.

2.Trojan Horse

It is a Worm which pretends to be a useful program or a Virus which is purposely attached to a useful program prior to distribution. It's same as Virus or Worm, but also sometimes used to send information back to or make information available to perpetrator. Trojan unlike Worms, which self propagate, it's require user cooperation.

iii.ONLINE FRAUD

Online fraud is a broad term covering Internet transactions that involve falsified information. Some of the most common forms of online fraud are the sale via Internet of counterfeit documents, such as fake IDs, diplomas, and recommendation letters sold as credentials; offers of easy money, such as work-at-home offers that claim to earn individuals thousands of dollars for trivial tasks; prank calls, in which dial-up connections lead to expensive long distance charges; and charity facades, where donations are solicited for phony causes.

iv. Identity Theft

Identity theft is a major form of online fraud, or misrepresentation. Personal identity theft on the Internet is the newest form of fraud that has been witnessed in traditional settings for many years. For example, in traditional settings, thieves open credit card accounts with a victim's name, address and social security number, or bank accounts using false identification. In the online world, electronic commerce information can be intercepted as a result of vulnerabilities in computer security. Thieves can then take this information (such as credit card numbers) and do with it what they will. This is one of the reasons for which it is critical that consumers and organizations avail themselves of appropriate computer security tools, which serve to prevent many such interceptions.

Identity theft can also be undertaken on a large scale, as in the case of a company or even a city. For example, in January 2001, the entire municipality of Largo, Florida lost e-mail service for over a week when an unknown company based in Spain compromised its identity. The company hacked into the city's e-mail relay system to steal the Largo.com identity. Soon enough, e-mail spam seemingly from Largo.com addresses flooded.

v.Data theft

Data theft is the term used to describe not only the theft of information but also unauthorized perusal or manipulation of private data.

To promote safety of users data in online transaction, the Symantec had enclose worldwide security intelligence data gathered from a wide range of sources through their products to ensure security. Future more, it attracts email from around the world to measure global spam and phishing activity to provide an extensive antifraud community of enterprises and consumers; and receive fraudulent Web site addresses for alerting and filtering across a broad range of solutions. There is more products and services provided by Symantec to secure data and reduce the risk of being attack by hackers. For safeguard of non technical threats, enterprises are given advice to secure their own data and customer data by setting up an outside personal storage device and well manage their web based asset.

http://38blog123.blogspot.com/2008/06/threat-of-online-security-how-safe-is.html

http://eclyns-ec-ec.blogspot.com/2008/07/threat-of-online-security-how-safe-is.html

http://ecomspace.blogspot.com/2008/06/treat-of-internet-security-how-safe-is.html

http://kungfubearcat.blogspot.com/2008/06/threat-of-online-security-how-safe-is.html

http://www.symantec.com/business/theme.jsp?themeid=threatreport

Phishing: Example and Prevention Methods

What is Phishing?

Phishing is a fraudulent process of attempting to acquire sensitive information such as usernames, passwords and credit card details by masquerading as a trustworthy entity in an electronic communication.
Some popular social websites such as YouTube, Facebook, and Windows Live Messenger; auction sites like eBay; online banks or online payment processors are often become the target of phishing.
Phishing is typically carried out by e-mail or instant messaging. It usually directs users to reveal their sensitive information at some faux websites for which are almost identical to the legitimate one.

How it works?
Most methods of phishing uses some form of technical deception designed to make a link in an e-mail appear to belong to the spoofed organization. Misspelled URLs or the use of sub domain are the common tricks used by phishers. For example, the link http://www.google.com@frame.fake.com/ may deceive a user that the link will open a page on www.google.com; in fact the link actually directs the browser to a page on frame.fake.com, using a username of http://www.google.com/.
Another method of phishing is that a phisher uses a bank or service’s own script against the victim. The method directs the users to sign in at their bank or service’s own webpage, where everything from the web address to the security certificates appears correct. In reality, the link to the website is crafted to carry out the attack. The method was used against Paypal in 2006.

Examples of Phishing

On 17 November 2003, many eBay customers received email notified that their accounts had been compromised and were being restricted. After clicking the hyperlink provided in the email, a web page which just looked like the same as eBay’s home page appeared. To re-register, the customer were told to provide credit card data, ATM personal identification numbers, Social Security number, date of birth and their mother’s maiden name. However, the problems was eBay did not send the email and the webpage did not belong to eBay.

Another example of phishing is the CitiBank phishing scam.

Upon clicking the link, the user is directed to an authentic looking page.

How to prevent it?

1. Never click direcly on any link from your e-mail. Be suspicious when you have come to a message that requires account verification.

2. Use strong password and do not use the same password for more than one site. Change it frequently.

3. Do not reply to any e-mail that require your personal information.

4. Use anti-virus and anti-spyware software, as well as a firewall, and update them all regularly.

5. Review credit card and bank account statements as soon as you receive them to check for unauthorized charges.