The sharing economy is facing an ethical dilemma: How can it curb sham providers if they’re not employees?
Last summer, a reporter for Vice News, Allie Conti, uncovered a pervasive scam on the Airbnb platform. Minutes before checking into a spacious and light-filled apartment as pictured online, the owner of the space contacted Conti with some sobering news: The toilet had overflowed and a plumber had been delayed. But as consolation, he offered another one of his properties that he promised was comparable and, in fact, larger.
Conti began calculating her refund when she arrived at what she describes as “what looked more like a flophouse than someone’s home.” It was dusty and dirty with minimal decor and shoddy furniture. She stayed the night and bolted for a hotel the next day. Securing a refund proved futile. Because the transaction had already cleared and Airbnb’s refund policy is confusing and arcane, Conti received just a fraction of her money back, and only after hounding customer service representatives for days.
What Conti uncovered is a nationwide issue throughout the sharing economy. Providers have discovered ways to embellish or entirely fabricate what it is they offer, whether it’s using stock photography in an Airbnb listing, skirting criminal allegations on an Uber background check or embellishing their experience as a dog walker on the Rover app. In each case, the scammers are contractors, not direct corporate employees, and take advantage of how difficult it is for companies in the sharing economy to quickly address concerns, issue refunds and closely monitor behavior. This raises an ethical dilemma: How can companies incentivize good behavior after christening people who are essentially strangers, with no stake in the business, as brand ambassadors?
Problems with a Ratings-Based Economy
The sharing economy relies heavily on the platform itself—usually a ratings-based app—to self-select ethical providers, regardless of how large the company grows.
“[The sharing economy] seems to be moving more toward a typical corporate model as it matures and grows—huge organizations that are becoming more like a hotel or rental car company,” says Aric Rindfleisch, professor of marketing at the University of Illinois. “[However,] the providers aren’t employees, so [the company] doesn’t have the same kind of power to monitor and enforce. What’s happening is they’re focusing heavily on reputation systems and rankings. … Primarily, that’s how ethical behavior is monitored.”
This system falls far short of ironclad. Conti’s scammer had gamed their reviews by creating other fake accounts to praise them and their property. The scammer also lied to Conti and claimed Airbnb’s review algorithm was broken, so any issues should be addressed directly and not posted. Then, when Conti began to cry foul, the account disappeared only to resurface under a different name, purporting to rent an apartment with strikingly similar photos to the first.
Companies in the sharing economy have set themselves up with few options to ensure customers encounter ethical interactions with providers. This loose grasp on a guaranteed ethical experience can quickly drag down the reputation of an entire brand.
“Think about buying a new car or a new house,” Rindfleisch says. “After a while, you hear the squeaks. We see that happening now with the sharing economy, especially with some of the social issues. My guess is it wouldn’t take very long to have the platform brand tarnished.”
Brands as Bankers
To more effectively promote ethical behavior, experts offer a solution that hits scammers where it matters most: their wallets.
Baojun Jiang, associate professor of marketing at Washington University in St. Louis, has written extensively on the sharing economy alongside Rindfleisch. He suggests that companies act as a financial middleman between the user and provider. Jiang recommends implementing a holding period between when the user pays the fee and when the provider receives that money, which is only made available after service is complete and any lingering issues are resolved. In the case of Airbnb, the company could withhold rental payments from new hosts for a month, leaving ample time for complaints to be filed and responses solicited. As the host remains on Airbnb and garners positive reviews, that month-long period can be reduced; Airbnb could even reward exceptional hosts by reducing its fee.
On the flipside, Jiang recommends that renters be required to complete their stay and payment before leaving the all-important review and star rating. “On some platforms, you don’t have to have a real, verified transaction to write a review,” he says. “Once you set this up, it would save the company a cost, because … if you have a good policy and implement it a few times, people will know the system and they will stop [scamming].”
Avoiding False Positives
Rindfleisch posits that providers who have access to more customer data would have an easier time calibrating their behavior toward improved experiences. “Part of the reason for a bad service encounter could be just a lack of information,” he says. To keep data anonymous and protected, he adds that “the solution would be something along the lines of providing aggregate statistics. For example: ‘Here are the most common complaints in your specific location … or age group,’ then share that market intelligence in aggregate form rather than individual level, just like a firm would do.”
This sort of data would also help to shore up any cultural misunderstandings that could be perceived as ethical violations, particularly when working with international customers. Similar to how companies control the receipt of payments, companies could reward great providers with a greater amount of information, further feeding a positive review cycle and ensuring stellar contractors remain on the platform and secure more business.
Ethical providers may not be employees, but brand ambassadors who see strong ROI are happy brand ambassadors.
Illustration by Bill Murphy.