David Pope, identity and fraud prevention specialist and Marketing Director at Hooyu, writes of how fraud is targeting the sharing economy and why gaining trust is the difference between widespread adoption of sharing economy platforms and not.
Over the past decade we have seen a marked shift in how we as a global society wish to interact. No longer do you have to rent specialist holiday homes from a travel agent, you don’t have to call a cab and the days of the car boot sale are numbered. The rise of the sharing economy has completely changed how we do things and the evidence suggests that these new behaviours of share and share alike are on the rise thanks to a myriad of electronic platforms allowing us to interact with people we would never have even said hello to before let alone shared our homes or cars with. This of course has many benefits from cost savings (selling your unwanted items) to environmental benefits (carpooling) however the more you share the more you are transacting both financially and otherwise with people who you simply don’t know; this is causing potential sharers pause for thought. Trust is holding back online peer-to-peer transactions in the sharing economy and online marketplaces such as buying second-hand goods online or renting a holiday property, but the fast growth of some of the best-known companies in the sector is masking the fact that mainstream use is being held back. We know the growth is there, eBay for example has over 158 million active buyers and 800 million listings worldwide. To date, Airbnb has facilitated 10 million nights of accommodation. And BlaBla Car motors 40 million passengers and drivers a year.
So there has been huge growth which has to date been delivered by the early adopters. But trust and confidence issues are holding back mainstream expansion of the sharing economy. We recently launched HooYu as an identity confirmation platform designed for the sharing economy so that businesses and people alike can confirm the identity of a person they are transacting with. In the HooYu Trust & Identity Report we found that only 25% of people have used online auction marketplaces and only 15% of people have used sites to rent a holiday property. Only 8% of people would be happy to transact online with somebody they didn’t know without trust and confidence in that person’s identity. There are perfectly logical reasons for this, as platforms like these provide fertile hunting grounds for online scammers.
Ways fraudsters target sector
“Holiday Fakers” (how fraudsters target consumers)
In the holiday rentals sector, there are stories abound of fake property owners. They post a property for rent and in their profile on the marketplace add text to say to email them if they don’t respond quickly via the platform’s own messaging system. The unwitting holidaymaker who wants to bag that property at that low advertised price follows-up by email and at that point the fraudster has taken the holiday maker out-of-bounds of the safety of the platform. Then they encourage the holidaymaker to pay via a bank transfer instead of the platform’s payment mechanism. The holidaymaker has unwittingly paid for a non-existent booking on that holiday rentals platform.
The “Ride a Launder” (how fraudsters use platforms to conduct criminal activity)
In the ride sharing sector, fraudsters use ride sharing platforms to launder money. A fraudster creates two accounts, one using compromised identity and card details and another with a fake identity that they control. They then pay for a rideshare (that never actually takes place) and via the rideshare platform move money from the compromised card to another financial instrument that they control.
The “(Permanent) Car Share”
The sharing of high value luxury cars is at the glamorous end of the sharing economy but is also a major target for fraudsters. Using stolen identity details fraudsters can circumnavigate the security measures in place on a platform and then use a stolen credit card to pay the fees for ‘sharing’ the car. Once the car is picked up, and then never returned the fraudster has got away with often a six figure car leaving nothing but fake details behind.
Fraud is not a new concept, especially in the online world. There are two truths about fraudsters though; they look for the path of least resistance; they are as organised and technologically savvy as the largest of businesses (often more so). I firmly believe though that this shouldn’t mean that we don’t progress, technology should be for the benefit of society and the sharing economy especially is to be encouraged. Here are a few top tips on how sharing economy businesses can keep fraudsters at bay.
Five ways to add to trust, confidence
1.Offer a well-lit marketplace by verifying your sharers, it will return dividends in terms of attracting new customers to register and transact and keeping fraud out.
2.Lose the caveat emptor approach. Sharing economy platforms need to stop passing the risk to consumers when it comes to the identity of their users. Statements such as “We cannot and do not confirm each member’s identity” or “User verification on the internet is difficult” are frequently buried in the T&Cs on sharing economy sites leaving the unsuspecting consumer unknowingly at risk.
3.Don’t just use social sign-in as your verification mechanism. Social sign-in just gives you some identity information about the customer, it doesn’t verify the identity of the customer. Platforms need to examine and cross reference the data that they are receiving. HooYu’s approach uses multiple sources of information to confirm and corroborate an identity.
4.Enable your customers – the focus is on the individual in the sharing economy as they are the ones sharing. Enabling them to put fears aside by giving them additional tools to verify who they are dealing with makes a sharing economy platform much more attractive, offering not just a unique service but also peace of mind.
5.Go beyond identity. Identity is just one component of trust. If somebody is using their own identity, then you can more safely assume that they will evidence good behaviours. However, competence and intention are also parts of trust and confidence which must be built through mechanisms such as ratings and reviews.
About the author
David Pope, Marketing Director at HooYu has worked in customer identity verification since 1999. David has authored several reports and white papers on how fraudsters go about their business and regularly presents at industry conferences. Prior to setting up HooYu, David was the Marketing Director for Jumio, the Marketing Director for Experian Decision Analytics and Marketing Director for 192business, the first global identity verification company which was later acquired by Experian.
About HooYu
HooYu is an identity confirmation service used not only by businesses that need to check their customers are who they say they are, but by consumers who want to check another person’s identity before they proceed with an important or sensitive transaction. The firm’s approach is to use universal tokens of identity including social media, digital footprints, identity documents and facial biometrics to confirm identity. HooYu cross-references and analyses data from a person’s digital footprint to confirm their real-world identity. It also extracts and verifies data from ID documents at the same time as authenticating the ID document and conducting a biometric facial check comparing a selfie of the customer with the facial image on their ID document. Visit www.hooyu.com.
