The freelancing boom has been a long time coming.
Experts in 2017 predicted that the majority of the U.S. workforce would be gig workers within a decade, and some now expect the pandemic to accelerate this shift. Many have lost jobs during the ongoing crisis and may seek out or receive gigs in lieu of full-time positions.
Companies may also be eager to hire such talent at this time. A reported 80 percent of U.S. employers already rely on a mix of workers that includes both full-time positions and contractors, and the economic downturn may prompt companies to freeze hiring full-time staff members and depend more heavily on temporary workers instead. It may also encourage businesses to shift their geographic hiring practices. Companies have had employees work remotely during stay-at-home orders, prompting many to realize that a remote workforce is not only feasible but highly effective. Business owners are therefore considering hiring more talent from outside their local markets.
Businesses that are interested in recruiting freelancers and gig workers worldwide can meet and transact over digital marketplaces. Such hiring deals will not get off the ground, however, unless these platforms can ensure all parties feel safe. Hiring companies need to be certain that the talent they are engaging with is reliable and reputable, and they would rather not worry about cybercriminals aiming to make off with funds and never deliver work, for example.
“Platforms build their reputations by ensuring access to trustworthy, reliable freelancers,” said Shany Malbin, director of payments at professional services-focused freelancing marketplace Fiverr, in a recent PYMNTS interview.
Gig workers, in turn, want to be certain that platforms will keep their payments information secure, and governments in countries where the marketplaces operate will need to guarantee that the platforms do not wittingly or unwittingly enable criminal activity to flourish. This makes it critical for global freelancing marketplaces to enact strong identity verification and regulatory compliance measures so they can safely serve the growing gig economy. This challenge has led some marketplaces to rely on payments partners that can tackle the regulatory burden on their behalf.
Reassuring Freelancers and Hirers
Marketplaces must have strong measures in place to prevent fraudsters from gaining access to freelancers’ accounts and making off with their payments. Platforms can put freelancers at ease by requiring them to undergo authentication and identification processes confirming their identities before they are able to access any money, Malbin said.
“Freelancers are asked to provide some form of identification or authentication, should they want to withdraw funds from their account,” she explained.
Freelancer marketplaces can also improve the security and accuracy of these identification processes by enabling gig workers to opt in to two-factor authentication, in which users have to provide a second piece of evidence to confirm their identities besides a password, Malbin said. This can make it more difficult for criminals to get in, even those who have managed to steal account passwords. Marketplaces can reduce the likelihood of criminals successfully obtaining such details in the first place by carefully encrypting freelancer data.
“We use strict procedures and security features to prevent any unauthorized access to data, and the transmission of a freelancer’s ID is also protected by SSL encryption,” she said.
Freelancer identity verification does not just protect workers. It can also help corporate hirers feel confident that they are transacting with real individuals, not fraudsters. Malbin recommended that platforms encourage their freelancers to upload work samples as well to help assure employers that these professionals have the skills being advertised.
Some marketplaces also partner with regulated payment providers to help them monitor their platforms for signs of fraud. Payment providers that work with several different marketplaces are likely to have the wider perspective to help spot bad actors who may operate across multiple freelancer platforms.
Defrauding would-be employers is only one scheme perpetrated by fraudsters who manage to slip past platforms’ security measures and open freelancer accounts. Other malicious actors instead intend to use their accounts to abuse marketplaces to launder money or carry out other scams.
Countries working to crack down on this may each have their own sets of rules and regulations intended to thwart criminals. Global marketplaces could therefore have to comply with many different policies and be certain that they can keep up as those regulations change.
“It is important that marketplaces stay up to date on all the rules and regulations for each country they operate in,” Malbin said. “Things are changing all the time, and it’s important to ensure that we’re up to speed.”
Not all freelancer marketplaces have the resources to take on this work themselves, and Malbin said Fiverr chose to work with payments platform partners like Payoneer that would handle all the regulatory requirements involved in securely and compliantly disbursing funds to gig workers.
Abiding by regulatory requirements in each target geography is important work that is critical to enabling freelancer marketplaces’ expansions as well as vital to growing the gig economy as a whole. These responsibilities will only become more important as the freelance sector grows.