Trust in the Sharing Economy

By: Dheepan Ramanan

August 20, 2015

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Businesses have always operated on the currency of trust, but the new “sharing economy” is pushing the need for trust to its limits. Quite suddenly, services that require inordinate amounts of trust have sprung up everywhere: we accept rides (Lyft, Uber), eat in dining rooms (Feastly), and even vacation in the homes of complete strangers (Airbnb). This phenomenon is not just an economic shift, but a cultural one. We are growing more comfortable with trusting strangers with our possessions, our data, and on certain occasions, even our safety.

The cultural shift has happened so quickly that regulators haven’t yet caught up. The individuals providing the services are not employees of these companies, so what is their responsibility when dangerous situations arise? What is their legal risk? A recent incident during an Airbnb transaction points to the gray area in this matter.

In light of this traumatic occurrence, Airbnb refined their safety procedures to better handle dangerous situations like this one.

Although this incident is far from commonplace through services like Airbnb, it does highlight some of the potential dangers of trust in the sharing economy. Fraud and misinformation may be more benign, but they are still highly negative experiences that can be associated with these services. But are problems really common? I wanted to examine how often users experience problems, and how much they trust these service providers.

To compare the trustworthiness of these companies, I analyzed conversations on Facebook between these property-sharing companies (including Lyft, Uber, Feastly, and property-renting services such as VRBO, Homeaway, Flipkey, and Airbnb) and more traditional businesses (banks and credit card companies) on issues of legal liability.

Credit card companies and banks constantly deal with critical issues of trust. Look no further than identity theft and fraud. These issues are not common, but when they do occur they create make-or-break moments in their relationships with customers. As a result, these industries have adapted to provide high levels of problem resolution around these topics. Performing a cross-industry comparison on these topics should provide a clue if we can trust our personal safety and our money with these new services.

  • Overall the property sharing companies like Airbnb fare very well in comparison to established and trustworthy brands in banking and credit cards.
  • In areas of legal liabilities, fraud, and security concerns, property sharing companies average 20% less conversation. This indicates that overall, these companies do a good job at minimizing potential fraudulent and unsafe situations.
  • Property sharing companies have the lowest percentage of fraud comments.
  • One area that these companies could improve upon is handicap accessibility. This makes sense, as many private homes are not handicap accessible; however, more of an effort could be made to clearly label properties.
  • Remarkably, only 85 comments indicated racism or uncomfortable behavior from hosts out of over 70,000 for property sharing services.

On the other hand, a slightly different story takes shape when we look at the sentiment around these topics.

  • As expected, sentiment is highly negative when liability, fraud, or security concerns are mentioned, regardless of the industry.
  • Sentiment is exceptionally low for property sharing companies, particularly regarding fraud: they underperform by nearly .4 sentiment points in this area.
  • This indicates that although fraud and other legal issues are slightly less common among sharing services, blowback is even greater for these companies. Therefore, procedures for fraud and service responsiveness to these issues must be improved. Otherwise these companies risk greater exposure for these issues and a loss of customer trust.

The sharing economy is here to stay. But the extent to which these services will reach and maintain mass adoption will depend almost exclusively on their trustworthiness.

When we examine comments around legal issues, it is clear that although property-sharing services like Airbnb are good at avoiding potential issues, when problems do occur the negative reaction is harsher and could create churn.  As these industries mature, a company-wide focus on issue resolution and customer experience will be critical for brands that want to build and maintain customer trust.


Dheepan Ramanan is a data scientist at Clarabridge. Follow him on Twitter @DheepanRamanan.