The sharing economy has a wide range of possibilities for all the parties involved: hosts, customers, couriers, or drivers. However, there are some security and legal issues which are still to be solved.

Companies such as Airbnb, Uber, Bolt, or Wolt belong to the sharing economy. They operate in legal gray zones as the local laws aren't yet adapted to how these companies function.

The sharing economy has raised questions about the law on housing or broken traffic laws, leading to labor disputes worldwide. Apart from legal concerns, there are doubts about these companies not taking enough steps to protect guests, hosts, and drivers.

Significance of Sharing Economy

A sharing economy is an economic model which relies on peer-to-peer (P2P) purchasing. It offers the access or share of services and goods (from lodging to automobiles), usually by using mobile or online platforms.

A few issues have emerged in the wake of the rise of sharing economy platforms. For instance, it included counterfeited merchandise, robbery, violence, false ownership of lodging, and even money laundering.

Legal questions

Before it became popular, the sharing economy had little or no regulation of how it would work. But as it expanded in popularity, legislators and established companies started to notice. Taxi and hotel companies believe they're held to more standards and are subject to higher taxes compared to Airbnb or Uber. This has prompted lawmakers to bring this sharing industry under check with governments enforcing it.

Airbnb hosts located in San Francisco are now required to pay hotel taxes as well as adhere to other rules. Some European cities have now limited the amount of time an Airbnb property can be utilized to operate as a rental. Moreover, Uber and Lyft stopped their operations across Texas and Austin because these states included fingerprints checking in background checks.

Additional legal pressure comes from the drivers of ride-sharing companies. They have been involved in legal disputes with their employers all over the globe.

Uber, Lyft, and Wolt consider their drivers as contractors and not employees. They do not come under the "labor laws" to get the minimum wage benefit. This situation has led people to take to the streets with the hope that these companies will pay better wages and benefits.

Security is a major concern

The shared economy rests upon trust between the client and the driver or host. However, some profit from this trust. Customers have received threats and sometimes even assaults. People bringing the food to your doorstep are not always the ones you expected.

If these events occur, the company will investigate every allegation. If a driver is probed for criminal conduct, Uber and Bolt will restrict access to the driver. That person won't be able to use the app while the investigation is in progress.

The drivers hired by Uber or Lyft undergo an extensive background check that verifies their driving and criminal histories. However, critics argue that the background checks aren't thorough and could be easily blocked.

For instance, background checks neither require fingerprints nor do they go in the past seven years. Airbnb conducts background checks on hosts as well, but it acknowledges that the background checks are not extensive.

Many people wonder if Airbnb or Uber are more secure than traditional taxis or hotels. However, no statistics prove this sharing model is safer or less risky than taking a taxi or staying in a hotel. This is why it is time to ensure safety for all the parties involved.

Implementation of Regulations

Verifying identity is crucial for drivers and users using ride-sharing apps. This process involves the verification of the documents that users submit with Uber or other ride-sharing services.

These documents are then compared to identity databases. However, it is possible to "loan" the car to an unknown third party after the driver has been accepted. This could pose dangers to customers and is a complete evasion of the verification process.

The third-party won't undergo the application procedure or may use fraudulent documents. They can take on the identity of another person with a clean past.

Uber lets users open accounts using gift cards, prepaid cards, or shared payment platforms and it is leading to security concerns. The anonymous payment methods led to an increase in criminal or fraudulent actions.

To reduce these worries, Uber has implemented a new identity verification feature to establish an account with these payment options. It requires uploading proof of identity, such as a driver's passport or license. But how long will this go in addition to the validation of identity for drivers?

Identity Verification Regulations

Strategies for ensuring identity verification are crucial from a regulatory standpoint to operate a sharing economy. If the onboarding process does not involve identity verification, the government can impose massive penalties for infractions.

Identity verification regulations give companies guidance on how to check the identity of new customers or the onboarding process. Live detection, face verification, and biometrics could become a part of the process to stop fraud attempts.

In the U.S.A, Congress has recently approved the Anti-Money Laundering Act of 2020. The EU also adopted its ID verification law known as AMLD6.

Reducing fraud and financial crime effectively by partnering with Vespia

As the B2B world expands, a company serves all sizes of business from micro-dealers to solopreneurs to big corporations.

The KYB procedure requires companies to gather, analyze, and manage huge amounts of data about companies they have connections with. Making KYB checks manually takes a lot in terms of time and effort. Further, it can lead to costly human errors.

To combat this problem, Vespia offers the best KYB solution. We integrate intelligent regulatory technology into our AML infrastructure. It allows our tool to run the necessary checks and processes quicker and more efficiently than an AML compliance officer ever could.

How can one ensure that the companies they're signing up are legitimate businesses? How can you know that they are not facades to hide corruption, fraud, or money laundering? Automated and reliable business verification is the way to go.

The smart Vespia tool helps connect businesses to hundreds of verification and data sources, providing fast and accurate results.

Checking of digital business identity happens swiftly and efficiently with Vespia. Here is the information you get when performing a business verification:

1. Business check. Perform a company background check to make sure the name, business activity, and company status are correct.
2. Ultimate Beneficial Owners (UBO) check. Make sure that the ownership structure of the company is clear and transparent.
3. Politically Exposed Person (PEP) check. Investigate if an individual who is or has been entrusted with a prominent function abused his position to launder illicit funds or other predicate offenses such as corruption or bribery.
4. Sanctions check. Search in many government sanction databases and identify individuals who are prohibited from certain activities or industries.
5. Identity verification. Ensure that the person is who they claim to be.
6. Adverse Media check. Screen media for potential negative news on the customer.
7. AML questionnaire. Request additional information from the company. It may be very helpful in case extra information is needed to complete the verification.
8. Documents. Complete your verification with original incorporation documents or commercial register extracts (e.g. articles of association, financial statement, list of shareholders, or original commercial register extract).  

Why choose Vespia for checking the licitness of businesses?

Many businesses do not involve the interaction of partners. Nowadays, a contract is signed and a transaction is made almost blindly as there is not much time for courtship.

While researching about the company, it may not be easy to get anything beyond what the official document says. A business verification can take up to no less than 16 weeks despite the possible tools. But what about having all the relevant information quicker? That's where we step up because it's a new standard for business verification.

Get worldwide coverage

Our tool connects the business to reliable and trustworthy data sources from 4000 AML databases and commercial registers of 300 jurisdictions. This includes real-time data from public records.

Obtain 60% of the company data in less than 30 seconds. Our tool allows looking into every single piece of information about the company from different databases simultaneously.

Utilize custom workflows

Conduct KYB and KYC depending on the specific circumstances and the risk. Verify and screen UBOs, or combine watchlist screening with business verification. Businesses can check the tax ID numbers of unregistered gig economy contractors and workers.

Enjoy simple pricing

All business customers will receive the benefit of undertaking business verification at cheaper rates. Vespia is 37 times more economical than the regular KYB providers, with no hidden fees. Additionally, we offer a pay-as-you-go model so you can gain flexibility in your business verifications.

Verify companies and get an overview in a matter of seconds

We can make the process of verifying and onboarding customers seamless for you. Our AI-powered analysis of the business gives you a comprehensive overview of the verified company as well as offers recommendations. You can spend more time building your business, not worrying about verifying your business customers.

Partner up with Vespia and stay more compliant than ever. Discover how you can make more business without losing your reputation in a matter of seconds.

--------

Do you have feedback or ideas? Reach out to us on the chat (right here in the bottom right corner!), LinkedIn, or Twitter.

Would you like to build trust with us? Click here!

Are you interested in helping us build trust? We’re hiring!