FTC “Sharing Economy” Report Explores Evolving Internet And App-Based Services

A Federal Trade Commission staff report provides an in-depth assessment of evolving business models that rely on Internet and app-based “sharing economy” platforms used by millions of Americans. The report summarizes a June 2015 FTC public workshop and highlights a number of competitive benefits and potential consumer protection challenges posed by disruptive business models in markets such as for-hire-transportation and short-term lodging.

The report, The “Sharing” Economy: Issues Facing Platforms, Participants, and Regulators, details how buyers and sellers are increasingly using internet-connected devices – smartphones and tablets – to access a matchmaking platform that allows them to search for new services, secure a price point, and complete a transaction. It discusses several “trust mechanisms,” such as reputation rating systems or money-back guarantees, which help build trust between buyers and sellers, as well as providing confidence that a transaction will proceed as agreed online. The report summarizes concerns expressed by state and local regulators and stakeholders that sharing economy platforms enable new entrants to evade regulations designed to protect consumers and promote public safety. In exploring the tension between the potential competitive benefits that sharing economy business models may provide and the potential consumer harms that they may pose, the report draws on the FTC’s expertise as both a competition and a consumer protection agency.