By the Blouin News Technology staff

Authentication: the next phase of the online marketplace

by in Enterprise Tech, Personal Tech.

Brian Chesky of Airbnb speaks during the Digital Life Design conference. Getty/ Johannes Simon

Brian Chesky, CEO of Airbnb, speaks during the Digital Life Design conference. Getty/ Johannes Simon

Online home rental and swap marketplace Airbnb announced on Thursday the launch of an authentication mechanism that would verify the identity of renters. The verification is a two-step process. It asks them to log in with a Linkedin or Facebook account. Then, it asks for a copy of a state ID or registration with a background investigation service, Jumio.

Adding verification to the Airbnb experience was long overdue, as Airbnb mishaps were starting to tarnish the startup’s image. (There were several reports of properties being used as brothels, ransacked, and host identities being stolen.)

And with the proliferation of startups that depend on the user-to-user experience (Lyft, Taskrabbit and Flightcar are a few) authentication will play a role in the future of the sharing economy. While there have been no publicized fraud situations at Taskrabbit — a website where people assign and take on simple tasks such as moving and furniture assembly for a nominal fee — many users have complained about inexperienced, uncertified, and uninsured workers. There have been no widely publicized incidences at Lyft and Flightcar — ride-share services founded in 2012 and 2013 respectively — either, but if the users of these services multiply as the founders project, cases of fraud will as well. Startups that take steps to reduce the chances of a car-jacking or theft will have an advantage over those who let things be.

The sharing economy is not the only industry that could benefit from identity verification. Users of online marketplace eBay have reported countless incidences of fraud where the buyer and seller were untraceable. While a transparent identity could be unnerving, it could reduce the cases of fake and defective goods, as well non-payments.

But there are users who value the anonymity of the internet. One of the top reasons for digital currency Bitcoin’s popularity was that it enabled buying and trading without leaving a trace of identity (such as a checking account, credit card number, or address). Andthe downside of a full, hidden profile on site such as Airbnb or eBay is that a hack could lead to many stolen identities.

As consumers’ tastes in e-commerce diverge, so will e-commerce solutions. Some could advertise their superior background checking process for those averse to doing business with strangers, while others emphasize anonymity for those willing to take the risk.