FTC Examining Sharing Economy

UberAs companies that are part of what is known as the “sharing economy” grow in popularity, the Federal Trade Commission is taking an interest in whether new regulation is needed to protect the public.

Internet and crowd-sourcing-based businesses like Uber, Airbnb, and others rely on peer-to-peer transactions for a variety of services including transport, ecommerce, and hospitality. The US trade watchdog, the FTC, is investigating whether consumers are at risk for either liability or the use of personal information by these businesses. They are also responding to problems they have noticed in other parts of the world.

Right now in the US the FTC has responded to this new industry positively, seeing ride-sharing apps like Uber, Lyft and Sidecar as good for competition. The FTC has contacted local and state legislatures asking them to refrain from passing laws which would put the crowd-sourcing companies at a disadvantage to the traditional taxi services.

“Essentially we want to see how we can regulate these new business models in a way that would protect consumers and not hinder innovation,” said Marina Lao the director of the planning office of the FTC.

However, there are two areas in which the agency feels further examination is in order: the practice of these businesses to accumulate lots of personal data and the practice of using rating systems. There are also legal liability issues that need to be addressed.

“We want to see to what extent sharing economy platforms should be able to monitor participants by collecting, let’s say, location data,” said Ms. Lao. “And if they do monitor, how can they do so while adequately protecting the privacy of the participants?”