Over the past decade we have seen a marked shift in how we as a global society wish to interact. No longer do you have to rent specialist holiday homes from a travel agent and these days you don’t even have to call a cab.
NB: This is a viewpoint by David Pope, marketing director at HooYu.
The rise of the sharing economy has completely changed how we do things. Evidence suggests that these new behaviours of share and share alike are on the rise thanks to digital platforms allowing us to interact with people we would never have even said hello to before, let alone shared our homes or cars with.
This of course has many benefits, from making extra cash from renting out your house when you're not using it to environmental benefits such as carpooling. However, the more you share the more you are transacting both financially and otherwise with people who you simply don’t know; this is causing potential sharers pause for thought around fraud.
Trust is holding back online peer-to-peer transactions in the overall sharing economy but the fast growth of some of the early adopters and best-known companies in the sector - Uber, Airbnb in particular - is masking the fact that mainstream use is being held back by this lack of trust.
Our own internal research found that only 8% of people would be happy to transact online with somebody they didn’t know without trust and confidence in that person’s identity.
There are perfectly logical reasons for this, as platforms like these provide fertile ground for online fraud.
Three ways how the sharing economy and online marketplaces are targeted by fraudsters.
- “Holiday Fakers” (how fraudsters target consumers)
In the holiday rentals sector, stories abound of fraud by fake property owners. They post a property for rent and in their profile on the marketplace add text to say to email them if they don’t respond quickly via the platform’s own messaging system.
The unwitting holidaymaker who wants to bag that property at that low advertised price follows-up by email and at that point the fraudster has taken the holiday maker out of the safety of the platform.
Then they encourage the holidaymaker to pay via a bank transfer instead of the platform’s payment mechanism. The holidaymaker has unwittingly paid for a non-existent booking on that holiday rentals platform.
- “Ride a Launder” (how fraudsters use platforms to conduct criminal activity)
In the ride sharing sector, fraudsters use ride sharing platforms to launder money. A fraudster creates two accounts, one using compromised identity and card details and another with a fake identity that they control. They then pay for a rideshare (that never actually takes place) and via the rideshare platform move money from the compromised card to another financial instrument that they control.
- The “(Permanent) Car Share”
The sharing of high value luxury cars is at the glamorous end of the sharing economy but is also a major target for fraudsters.
Using stolen identity details fraudsters can circumnavigate the security measures in place on a platform and then use a stolen credit card to pay the fees for ‘sharing’ the car. Once the car is picked up, and then never returned the fraudster has got away with often a six figure car leaving nothing but fake details behind.
Fraud is not a new concept, especially in the online world. There are two truths about fraudsters though; they look for the path of least resistance and they are as organised and technologically savvy as the largest of businesses (often more so).
But technology should be for the benefit of society and the sharing economy especially is to be encouraged. Here are a few top tips on how sharing economy businesses can keep fraudsters at bay.
Five ways sharing economy businesses in the travel industry can increase trust and confidence
- Offer a well-lit marketplace by verifying your sharers
It will return dividends in terms of attracting new customers to register and transact and keeping fraud out.
- Lose the caveat emptor approach
Sharing economy platforms need to stop passing the risk to consumers when it comes to the identity of their users. Statements such as “We cannot and do not confirm each member’s identity” or “User verification on the internet is difficult” are frequently buried in the T&Cs on sharing economy sites leaving the unsuspecting consumer unknowingly at risk.
- Don’t just use social sign-in as your verification mechanism
Social sign-in just gives you some identity information about the customer, it doesn’t verify the identity of the customer. Platforms need to examine and cross reference the data that they are receiving. Our approach uses multiple sources of information to confirm and corroborate an identity.
The focus is on the individual in the sharing economy as they are the ones sharing. Enabling them to put fears aside by giving them additional tools to verify who they are dealing with makes a sharing economy platform much more attractive, offering not just a unique service but also peace of mind.
Identity is just one component of trust. If somebody is using their own identity, then you can more safely assume that they will evidence good behaviours. However, competence and intention are also part of trust and confidence which must be built through mechanisms such as ratings and reviews.
NB: This is a viewpoint by David Pope, marketing director for HooYu.
NB2: Image by Creative Studios/BigStock