December 2, 2016 |

The FTC Report And Its Upshot On The Sharing Economy

Last month, the Federal Trade Commission (FTC) launched a report about issues facing platforms, participants and regulators, that directly concerns the sharing economy. Besides the inevitable truth of a more reliable safety within the industry, the commission suggested a solution to outcome the future undesired effects, through user rating and review services.

Over the last years, the avant-garde development of peer-to-peer platforms, such as Uber, Lyft, and Airbnb, have been competing with the traditional business sectors such as for-hire transportation and short-term lodging. Not only that, these platforms came along with huge advantages for consumers and suppliers. They also enthused extensive discussions about the possible need of regulatory measures, in order to protect consumers, promote public safety, and meet other legitimate governmental goals.

The controversial aspect of regulations within the sharing economy draws on the financial impact that might affect the incentives for innovation in the future. The result of higher costs and lower potential returns can affect new entries and customers’ benefits from new products and service offerings.

As peer-to-peer companies are developing mainly through technology, they do not quite fit into the regulatory framework of their respective industries. Highly regulated businesses are expected to compete with services that do not comply with the same level of protocols. This indicates the need of regulators to develop new methods of approaching these new industries.

There is a solution

The solution the FTC suggested was that if some sort of “trust mechanisms” are going to be implemented by the sharing economy platforms, then the need for consumer protection and safety regulations will be significantly reduced. If peer-to-peer companies could auto-regulate themselves through identity and reputation management, many bad actors will vanish from the system.

The good news is that many companies already try to ensure safety and trust through, i.e. rating system, which allows them to eliminate people that are rated poorly. The ride-sharing platforms are also initiating checks on the driver’s background, criminal record, and license.

This is where deemly comes in – we allow users of the sharing economy to verify themselves through social media, sms, and email. Furthermore, users are able to aggregate their ratings and reviews from multiple platforms into one score. Thereby, deemly enables users to create a full reputation and trustworthiness profile that they can refer to in all online transactions.