Is there a role for Intermediaries to enhance trust in the Sharing Economy?

Trust is the social lubricant that enables collaborative consumption marketplaces and the sharing economy to function without friction. Sharing saves people time, money and aggravation but trust is what allows someone to take a ride from a stranger or rent a room in a house from someone they’ve never met. Yet it’s also one of the biggest concerns of using sharing economy services.


According to a PWC survey conducted in December 2014, only 19% of the US adult population has engaged in a sharing economy transaction. Of the 1000+ surveyed, 72% want to participate in the sharing economy in the next 24 months. However, 69% say that they will not trust sharing economy companies. According to Pew Research, only 19% of Millennials believe most people can be trusted, compared to 31% of GenX’ers.Data from the General Social Survey, the National Opinion Research Center’s poll of American attitudes, found that only 32 percent of respondents agreed that people could generally be trusted, down from 46 percent in 1972. An October 2013 AP-GfK poll of more than 1,200 Americans found that just 41 percent of respondents express “a great deal” or “quite a bit” of trust in the people they hire to work in their home, only 30 percent trust the cashiers who swipe their credit or debit card, and a mere 19 percent trust “people you meet when you are traveling away from home.”

To increase adoption and engender trust, sharing economy companies have developed a sophisticated series of mechanisms, algorithms, and finely calibrated systems of rewards and punishments such as reputation systems, social graph integration, and behavior analysis. It is the next step in the evolution of the ¬person-to-person marketplace pioneered by eBay: a set of digi¬tal tools that enable and encourage us to trust our fellow human beings.The online setting presents an entirely new context in which trust must be negotiated without many of the normal antecedents and indicators. With its many variables and unknowns, the Internet can be seen as a setting in which the conventional rules and knowledge of everyday experience do not apply, and as such is perceived as a place of high risk. Users face privacy risks in that personal information can end up in the hands of the wrong people, and financial risks through transacting with unreliable parties. So the real question is whether the sharing economy companies are doing enough to establish trust? According to several experts in the fieldthey are not. The reputation systems and social graph integrations are necessary but not sufficient to establish trust.

Traditional brick and mortar commerce has a long history of face-to-face contact, and for many years, has been conducted predominantly among parties that knew each other or were in close physical proximity. More recently, however, transactions have increasingly taken place between parties hundreds of miles away, without the possibility for personal contact between transacting parties. Third party neutral intermediaries that provide information about transacting parties in the marketplace have made a huge impact in establishing trust and increasing liquidity and volume. A great example is the financial services industry where third party agencies such as the credit rating agencies (e.g., Experian and Equifax) have widely expanded the use of consumer credit. If left to lending banks they would only lend to customers with big deposits with whom the banks have a personal relationship.

A similar role forthird party information intermediaries is missing in the online sharing economy. Sharing economy companies need third parties to provide checks for identity, creditworthiness, driving records, criminal records, education, employment, legal status, etc. depending on the context of the transaction the parties engage in. Companies such as Onfido have a first mover advantage in enhancing trust through their online background checking services. Onfidoprovides authenticated checks for identity, driving records, criminal records, education, employment and credit to both sharing economy companies and traditional brick and mortar industries. By relying on services such as Onfido’s sharing economy companies can enhance trust and increase adoption.

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