Authentication

How Sharing Economy Platforms Keep Users Secure With Authentication

online ID verification

The sharing economy is a two-way street that operates on trust between suppliers and customers, and that trust is even more important for high-value exchanges like home shares. A homeowner wants to properly vet a potential guest and the guest also needs assurance that everything is on the level.

Unscrupulous practices can tarnish a brand that acts as an online marketplace facilitator. Uber was recently called out for charging customers a $1 fee that was supposedly for an “industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance.” It turns out the fee was only to benefit Uber.

This was a specific incident not related to verification and authorization in general. But platforms that use weak ID techniques to sign on new users and log in returning ones can also erode trust.

When digital platforms become popular, the first instinct is to attract more users and make signing up as seamless as possible. But this welcoming approach can attract fraudsters, as well.

In Who Are You? Verifying Digital Identity In The Sharing Economy, PYMNTS examines how consumers use sharing economy platforms in their everyday lives and how those platforms are taking measures to defend against digital fraud and identity theft.

How Do Platforms Authenticate?

Just 26.2 percent of sharing economy platforms require new users to verify their identities by submitting identification documents online. By far, the most common method of verification is providing an email address (71.5 percent). More than half asked for phone numbers (64.6 percent) and a response to an email or text (53.2 percent). Only 7.1 percent did not verify a new user at all.

These are the same methods commonly used to authenticate a returning user. Thirty-five percent say they are asked to provide email addresses, 24.5 percent phone numbers and 20.8 percent to respond to one-time email or text alerts. However, it’s fairly rare for a marketplace to ask returning users to provide identity documents when they sign back into existing accounts. Passwords are the top method used by platforms to authenticate a returning user. Close to half (49.5 percent) ask for passwords.

Passwords, as well as phone numbers, addresses and other personally identifiable information that authenticate users’ identities have been getting a bad rap since these types of information can be easily cracked or stolen.

What About Friction?

No one wants to answer a call or have to physically submit ID documents, but how much friction is tolerable for security’s sake?

According to this study, though, platforms’ fear of adding friction to signup and login processes may be overblown. Counterintuitively, 68.6 percent of consumers who are asked to verify their identities by providing identification documents online report being “very” or “extremely” satisfied with their sharing platforms’ signup processes, as do 67.5 percent of those asked to present physical identification documents in person at brick-and-mortar locations.

Homesharing and ridesharing platforms are among the most likely to require new users to verify their identities by submitting physical identification documents in person at brick-and-mortar locations. Among consumers who create accounts on homesharing platforms, 21.7 percent are asked to submit physical identification documents in person, as are 18.8 percent of consumers who use carsharing platforms.

At the other extreme, sharing platforms providing access to lower-value assets like clothing and ridesharing are less likely to verify new users by examining their identification documentation. Just 8.3 percent of the former and 24.3 percent of the latter platforms ask new users to digitally submit such documents when creating new accounts, for example, and zero percent and 14.6 percent, respectively, require new users to submit them in person.

Regulations and Compliance

Enabling seamless booking and payments experiences, while also keeping transactions and user data secure, isn’t solely about consumer trust. It’s also becoming more challenging as more governments pass regulations like GDPR that call for greater data transparency for consumers. Especially when a marketplace operates in multiple markets worldwide.

In an interview with PYMNTS, homesharing platform Spotahome Co-Founder Hugo Monteiro talked about these data security challenges. “We are constantly verifying what personal data we need for new features, if that data is totally necessary and how to manage that data when someone requests to be forgotten,” he said. “The less [user] information we store, the better. We need to protect our business as much as we need to protect the security of our customers.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the November 2019 AML/KYC Report, Zillow’s Justin Farris tells PYMNTS how the platform incorporates stringent authentication without making the onboarding and buying experiences too complex.

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