The sharing economy possesses tons of benefits ranging from providing companies with self-employment to minimizing environmental impacts. Along with all of these benefits, the sharing economy also counters various challenges. Fraudsters commit various attempts such as identity theft, catfishing, and much more to take their share out of this collaborative economy landscape.
The sharing economy is bringing various changes in the ways customers or owners shop online or do business. It is benefiting global firms in ways that help bring improvements and awareness. Sharing economy is opening the door to self-employment and progressive growth opportunities. However, in all this progress, the sharing economy’s affiliates can not leave identity verification unattended. This blog covers the challenges along with ways ID verification helps counter them.
Sharing Economy – A Brief Overview
The sharing economy has been a part of the world for ages. However, previously it was in the traditional form but has transformed over the decades. Here, digitization is the main force behind bringing transformations to the sharing economy landscape. It is an economic model where products, services, and assets are split among private individuals from around the globe.
The rising shifts in sharing economy’s operations are increasing the need for robust identity verification services. This is because fraud is on the rise and traditional methods are outdated. The communication in the sharing economy hemisphere is over the internet which is why it has other names to call. For instance, peer-to-peer or collaborative economy. While the sharing economy is proving numerous benefits to global individuals and firms, it is simultaneously facing various challenges.
This calls for employing effective identity theft protection solutions. This way platforms can ensure that no importer is accessing their services. PricewaterhouseCoopers (PwC) predicts that the sharing economy will see tremendous growth of over $335 billion by 2025. This shows that firms need to employ effective ID verification solutions to outperform in the sharing economy.
Identity Verification Services – Challenges Involved in Sharing Economy Participation
The main threat sharing economy is currently facing in the digital world is synthetic identity fraud. Fraudsters try to build partnerships with fake identities and shell companies. As per Shufti Pro News, when they onboard the platforms, the risk for criminal activities eventually rises. For instance, money laundering, data breaches, and exploitation of benefits. This leads to broken customers’ trust and reputational damages.
Therefore, firms require robust identity authentication solutions. Every sharing platform needs to have effective mechanisms that safeguard its databases and provide an enhanced experience to collaborators. If they fail in building such a system, they will encounter the following threats:
Digital Account Takeovers
Account takeovers are becoming commonplace ever since digital transformation took over. Fraudsters simply use fake information and sophisticated tools to gain unauthorized access to accounts, make changes, and take it over. However, with effective identity verification checks in place, there are fewer chances of firms facing this risk.
Sharing platforms commonly use emails to validate firms and individuals but considering the present rise in identity theft, these are no more sufficient. Industries rather require more efficient and robust ID verification solutions to perform multilayer identification of customers. While online tools are the massively emerging ways to verify customers remotely, industries should ensure that they utilize them in a proper way. Moreover, industries can mitigate the chances of cyberattacks, build effective communication, and ensure long-term partnerships.
Identity verification services are providing services even where the bots are present. These bots are the new game changers and active substitutes for human communicators. Companies are incorporating them on their platforms to automate the communication process and take necessary actions on the go.
However, criminals can use these bots to increase website traffic, impersonate a real person, or bring abruption in digital onboarding. This not only causes a lack of trust among sharing platforms but also compromises the security of affiliates.
Catfishing refers to the deceitful act where fraudsters create multiple fake profiles to reap illegitimate benefits. This helps them interact with global firms, escape regional sanctions, and exploit benefits. The most common threat this possesses is money laundering. However, with efficient identity authentication in place, firms can mitigate the chances of criminal threats.
Criminals commit data breaches by using identity fraud as their tool. This helps them get their hands on confidential information. Therefore, companies need to employ a biometric identity verification system to make sure they are onboarding legit customers. Shufti Pro Funding indicates that AI-powered solutions verify customers by analyzing their distinct human features and liveness detection.
In the End
The fast-growing peer-to-peer economy market is in need of seamless and effective identity verification solutions. This is so to build efficient onboarding mechanisms to make their place in the sharing economy. Failing to do so will lead industries to reputational damages, lack of trust, identity theft, cyberattacks, and much more. Where industries may face trust-building challenges due to demographic changes, ID verification solutions help them combat the risks in better ways. Ultimately, companies can outperform in the growing sharing economy competition.