Fraud Control, Business Travel, Staying Competitive In The Sharing Economy

In the $37 billion homesharing market, fraudsters are increasingly exploiting the speed and convenience that platforms promise. As Airbnb recently learned (in a big way), failing to validate the legitimacy of listings can sour consumer relationships, and lead to lost revenue. In the latest Payments And The Platform Economy Playbook, Chung-Man Tam, CEO of P2P business travel booking site 2nd Address, discusses how deploying artificial intelligence (AI) has helped crack down on fake listings and win customer trust.

Home rental platforms are dealing with an influx of fraudulent listings, much like the broader sharing economy, but fake listings on such marketplaces represent higher stakes — due to the high costs involved. Stolen payment information used to purchase an iPhone is one thing, but a fraudster dangling a fake beachfront property in front of a group of traveling executives is another.

Fake property listings can heavily damage homesharing platforms, which often rely on pictures and digital messages rather than face-to-face visits. These marketplaces must be vigilant about not only verifying those listing the properties, but authenticating the homes themselves, explained Chung-Man Tam, CEO of P2P business travel booking site 2nd Address, in a recent interview with PYMNTS. The company’s platform supports U.S. business travelers who often have more robust needs, like satisfying larger groups. Homes need to be safe and real for travelers and their companies, Tam said.

“We certainly don’t want a business traveler coming in for an important set of meetings to walk in and realize that that property is not actually legitimately owned by that host, so that’s obviously one of the first things that we look for and validate,” he said. “We’ll look at [whether the host has] the deed to this property, and we’ll verify [the] ownership. … We use a variety of different signals around the individual host that’s representing that property [to] understand [their] background, [and] if there are any sort of financial [or] criminal marks.”

Authenticating both hosts and properties can go a long way toward establishing consumer trust, and keeping fraudsters off of these platforms.

The Rising Fake Property Problem In Homesharing

The wider home rental space has been seeing increased fraud in recent years. Homesharing platform Airbnb is currently dealing with a spat of fraudsters, which can create serious trust issues for legitimate customers relying on these services for their vacation needs. Scammers will pull bait-and-switch tactics on renters, sometimes using real listings as jumping-off points. They spoof real listings, dupe customers into renting, claim at the last minute that the “original” properties have been damaged or otherwise put out of use, then send customers to much lower quality locations than the original bookings.

Business travel comes with its own challenges that consumer travelers may not share, including the need to have expenses and locations carefully vetted by travel managers within the company. All travelers duped by this particular type of scam find themselves essentially stranded in unfamiliar cities with limited options, Tam said. As such, all homesharing marketplaces need to look at both the hosts and the properties themselves.

“From a fraud standpoint, … the [scams] that we saw in the early days were folks [who] were effectively trying to create fake properties on our website to try and get past our early fraud detection techniques,” he explained. “We obviously beefed up the way that we do checks on the individual properties themselves, and on the individual hosts.”

Fake property listings are designed to immediately pull in customers, placing photographs of beachfront properties near enticing price points for potential renters, Tam added. The 2nd Address platform authenticates properties by requesting proprietary information from hosts, including photographs of the space that are run through online systems enabled with artificial intelligence (AI) to assure safety and security. This process can sometimes indicate the need for an in-person visit by a member of the platform’s team, particularly if the photos cannot be used to verify all aspects of the property. A home visit could be triggered by anything from photos that do not show all the surface areas of a particular home to photos that indicate safety concerns, such as a lack of smoke detectors. Automated tools are thus critical to detecting fraud in this space.

“[Using AI] is effectively the best way to do [this],” Tam said. “It’s very difficult to catch these things manually. Only by combining a couple of different data sources can you really get after [fraudsters].”

Fraud Concerns Follow Marketplaces To Every Market

Keeping all customers safe is one goal, but marketplaces must also ensure that they can satisfy customers’ needs, which, just like fraud attempts, can change, depending on the market.

“As we go international, some of those things are going to have to be adapted locally, [like] how we do fraud detection, how we do host verification, verifying specific locations and doing walk-throughs,” Tam remarked.

Currently, 2nd Address only has locations in the U.S., but the platform aims to expand to international markets next year. The company will start with the U.K. and Western Europe, and fraud control will be essential as the marketplace prepares for the shift. Its protections against fake listings may not change much, but other fraud factors, such as payment security, may need different approaches — since many markets’ laws vary as much as their consumers’ preferences.

Corporate travel is as global as business itself, but fraudsters have expansion plans of their own. Business and consumer homesharing sites will thus need to respond accordingly as perpetrators infiltrate these developing platforms.