Trust has always been the bedrock of the sharing economy.
But in recent weeks, the issue of trust — and fraud — has gained even more focus, thanks to a shooting at an Airbnb-listed property in California, and an investigative report about an alleged scam involving people putting fraudulent listings on the online service (Airbnb has not been implicated, one should note).
To get a sense of how trust will play out in such sharing economy listings in the new decade, PYMNTS recently caught up with Mike Gramz, executive vice president and chief risk officer at Yapstone, a company that provides online and mobile payment solutions for global marketplaces, as well as sharing economy platforms.
Sharing economy platforms have become a force to be reckoned with. Overall, roughly 111 million consumers use some type of sharing economy platform to make their lives easier.
Such a consumer segment, of course, attracts fraudsters. And according to PYMNTS’ Who Are You? Verifying Digital Identity In The Sharing Economy Report, based on a survey of American sharing economy participants, in the rush to onboard new users, making the customer experience more simple could be making security more vulnerable.
PYMNTS spoke to Gramz after Airbnb CEO Brian Chesky announced in early November that within a year, all Airbnb rental properties will be “verified” using a combination of guest and host inputs. That is the first of four key changes Chesky announced, the others being a guest guarantee, a 24/7 guest hotline, and a special review process for what Airbnb categorizes as “high-risk” rentals.
“The initiative they are taking is going to have impacts that are far-reaching in the industry, beyond Airbnb,” Gramz said.
Indeed, more security checks and related moves might lead to slower growth. But the sharing economy needs trust to continue to thrive, according to the views expressed by Gramz and others.
He said there are some main ongoing trends when it comes to fraud in the sharing economy — specifically, the part of the sharing economy that has to do with apartment and home rentals. Some people who list properties — as described in that investigative report, which came from Vice — either rip off customers entirely or are renting places with much lower quality than is advertised. Another method of fraud is to steal furniture and electronics from the listed property.
The latter method is often done via stolen payment cards and via quick bookings — say, 24 hours before arrival at the property. As Gramz explained, fraudsters can often get away with that because not all stolen payment cards are reported in quick fashion, or because back-end anti-fraud technology isn’t able to detect potential criminal intent in so short of a time frame.
But technology is getting better. Yapstone, for instance, uses unsupervised machine learning in its quest to detect fraud — among other tools that include IP addresses and vendor-supplied data — to figure out if a reservation might be from a fraudster, if a listing might be illegitimate or if a potential renter is an unwelcome criminal or sex offender.
Indeed, one of the challenges of detecting fraud in this sector of the sharing economy is that trust depends on multiple actors in the ecosystem, usually separated by great distances. All that data produces a score for potential fraud — those transactions deemed potentially criminal or risky are put in a queue for further review.
Spotting potential fraud in rental listings has always been important. But the challenge is getting even harder, even with the technology, at least in some cases. That’s because the rental process has changed significantly over the last few years.
In the past, Gramz told PYMNTS, even a card-not-present transaction to secure a rental reservation would require a last step in person, such as meeting the property manager to sign a final paper or to get the key.
“Now you have Ring, and keyless entry,” Gramz said. “That has opened the industry up to a tremendous potential for fraud.”
The industry still has a lot of work to do. As PYMNTS research has documented, when signing up for new digital economy platform accounts, just 26.2 percent of sharing economy platforms require new users to verify their identities by submitting identification documents online, and even fewer require them to provide these documents in person at physical locations (19.5 percent). The most common forms of verification are providing an email address (71.5 percent), providing a phone number (64.6 percent) or responding to a text or email alert (52.3 percent).
Sure, it’s convenient, but not always secure. But this is a critical issue that needs a solution, as a lack of trust can kill a business and hamper growth in the sharing economy.
“If you lose trust, you lose the business,” Gramz said.