Over the past few years, there’s been a large growth in the gig economy, or professionals who are contracted on a part-time or temporary basis for one or several businesses rather than engage in full-time employment with one company.
In today’s hyper-connected world, many gig workers and prospective employers utilize online marketplaces to connect with the right talent and opportunities. Think of the online platforms where you can access freelance professional services, or other common applications for rideshare or food delivery.
However, just like in all other corners of the digital landscape, users active on either side of these marketplaces can become victims of fraud, costing them hours of work with no pay, lost payments for no outcomes, compromised personal information and payment data, and more.
Continue reading below as we dive deeper into the current state of fraud and trust in the gig economy, and how more robust identity verification systems can help remedy this ongoing issue.
The Current State of Trust in the Gig Economy
As of 2023, there were an estimated 73.3 million freelance workers in the United States, up from 70.4 million the year before. Put differently, 36% of workers in the country earn a portion of their income from freelance work.
Although the allure of the freedom, flexibility, and income potential of the gig economy makes it attractive to many eager professionals, this has also made it a prime target for fraudsters as well.
According to TransUnion, over 25% of people using a gig economy platform will fall victim to fraud or identity theft. This means that one out of every four people active on these marketplaces will experience fraud! Plus, this is double the rate of fraud that people experience outside of gig marketplaces, which is 10%.
As you can gather from this alarming statistic, the current state of trust in the gig economy is faltering, with a growing number of people falling victim to fraud when using these marketplaces. This creates a unique challenge when there are more individuals than ever working in the gig economy, though a lack of trust and confidence is common gig marketplaces.
What Type of Identity Fraud Impacts the Gig Economy
There are several types of identity fraud that attackers use to exploit gig economy marketplaces, which can provide varying degrees of consequence depending on the circumstances. This can include:
- A freelancer/contractor on one of these platforms intentionally misrepresents their qualifications and experience to gain an edge over their competition; this might include writing fake reviews for their services to appear to have better ratings than they actually do
- Someone hires and pays a gig worker to complete a service that was never finished or delivered to the appropriate/agreed-upon standards, resulting in the loss of the payment amount
- A gig worker completes a requested service or task and is never paid by the client
- Identity fraud may occur when a gig worker uses a stolen identity to create an account and misrepresents their identity on a gig marketplace
- A fraudster may take over someone’s legitimate account on one of these marketplaces and use the account owner’s payment details to request/pay for services for their own benefit
- Fraudsters use gig marketplaces to hire, pay for, or deliver fraudulent activities or other crimes
How Identity Verification Can Help
Users on either side of online gig marketplaces can benefit from more robust security measures. So, whether you’re a person looking for a job opportunity using these sites, or someone looking to hire someone for a specific service, you want to use a platform that is proactively taking action to prevent and mitigate fraud.
One of the primary ways these platforms can do so is by leveraging comprehensive identity verification systems–including biometric verification, document verification, password-based security, or any combination of these methods with multi-factor authentication (MFA).
In turn, these platforms can ensure that people are who they say they are, and are not impersonating someone or using a stolen identity to access the marketplace under false pretenses.
Here are some of the specific ways that identity verification can help combat fraud in gig marketplaces:
- Account takeover fraud prevention: An identity verification system will help prevent unauthorized access to a person’s account, thwarting account takeover when requesting the user to verify their identity during an access attempt
- Verified work credentials: Platforms can require talent to provide certifications or licenses or complete background checks in order to verify they possess the skills and expertise they claim to have
- Better trust and safety: Implementing identity verification systems can instill confidence in users of these marketplaces, giving them the peace of mind that all providers and clients or customers are legitimate people; this can make users more comfortable to make transactions on these sites, feeling that their personal information is appropriately safeguarded
- Lower risk of fake profiles: By requiring users on either side of these platforms to verify their identities when creating an account or logging in, gig marketplaces can deter fraudsters from creating fake profiles or engaging in fraudulent activities on their sites.
Learn More About How to Stop Identity Fraud in Online Marketplaces and the Gig Economy
With a comprehensive identity verification system in place, gig marketplaces can instill more trust and confidence in their users and be better able to prevent and defend against fraud. As the gig economy is set for more growth, it’s imperative that these platforms look for better ways to protect both gig workers and those looking to hire them. These platforms can also offer a streamlined experience for both consumers and gig workers alike. Contact us for more information on how to implement the latest in identity verification technology today.