Focus on Fraudonomics: the rise and rise of the sharing economy

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The growth of the ‘sharing economy’ seems unstoppable.

We can now borrow money, homes, boats and pets. We can share a ride, have our dinner cooked, the list goes on…

It’s certainly disrupting traditional business models – and the majority of users are enjoying a hassle-free service. But, we are now also transacting financially with people we don’t know, or having to accept anonymous user reviews at face value.

So, the question of trust is central to the future of companies operating within the sharing economy.

And it’s in this grey area where fraudsters and scammers are using the anonymity of services to commit an increasing number of crimes.

Examples of this criminal activity include;

  • Scammers getting people to send payments via mimicked websites, or convincing them to send payments to a different website to the original platform, resulting in payment for a non-existent service.
  • Rental properties being used as a ‘pop up brothel’.
  • Fraudsters using stolen identity and compromised credit card details to pay for the shared ownership fees of high value luxury cars – allowing them to pick up the car and drive away, never to return.

Recent reports show 34% of consumers in the UK and US will not enter into a sharing economy transaction without knowing exactly who the other party is.

So, there are clear financial incentives for platforms to think about how they can effectively achieve this.

Of course, they also need to maintain the speed and convenience of the user experience whilst protecting consumers and their business’ reputation.

This is where digital identity verification solutions can be used to authenticate users. These solutions can include:

  • Relying more on non-personal data such as email address, device and mobile phone details. By establishing the location and reputation of this data, high risk users can be identified more easily. For example, if one email address has just been set up and is now being used to open multiple accounts, this may represent activity which should be flagged for review.
  • More robust sign-up verification checks based on social media account set-ups. Especially now large social platforms are beginning to explore and monetise other services themselves.
  • Depending more on machine learning. This will increasingly help identify suspicious transactions and unusual user behaviour.
  • Establishing more trust in the ratings and reviews. After all, if people make decisions based on fake reviews, this could undermine confidence in the sharing platform as a whole.

Together, this comprehensive collection of identity verification solutions can help build real trust in the sharing economy; establishing exactly who is who and ensuring businesses stay as safe as they are innovative.

Want to know more about the pitfalls and potential of the sharing economy, or Fraudonomics in general?

Author: Melanie Cameron, Senior Technical Sales Manager – Fraud & ID

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