Part III: Consumer Protection in the Shared Economy

In this series of posts, we’re delving into the world of the Shared Economy. We’ve discussed the rise of this business platform, and its benefits for users and for the environment. In this post we will explore the regulatory issues and risks involved and how we can manage these risks as consumers.

Consumers and the Shared Economy

The innovative business models created within the shared economy have undoubtedly created a plethora of choices, luring Australians everyday to switch to the benefits of the shared economy.

The benefits often overshadow the risks involved, but as consumers it is important to recognise that these risks do exist. Businesses on these platforms claim to act as intermediaries; simply connecting supply to demand. This creates a loophole exempting them from regular consumer protection laws.

Are Consumers safe?

These companies enforce consumer safety policies mainly through a number of reputation feedback mechanisms such as verified ID processes and user reviews. These systems provide consumers with a powerful voice in these economic transactions, fostering trust and reliability between the parties.

Companies such as Uber have developed ride-specific monitoring mechanisms, such as GPS tracking to allow users to verify the shortest route. Uber also has access to the personal information and credit card details of riders, which help ensure drivers safety – not to mention a cashless system which discourages theft.

AirBnB employs an official identification verifying system to confirm the identities of their users. Messaging features on this platform also allows users to get to know each other before any transactions are made.

This is not to say there are no flaws in this system – we’ve all heard the reckless driving, substance abuse and even assault stories of rogue Uber drivers. With billions of users across the world, Uber struggles to conduct regular background checks on user, but if it’s any consolation, we’ve also heard or experienced some crazy taxi drivers haven’t we?

It would be difficult for AirBnB or Uber to hold their services to the same standard as hotel chains and taxi companies around the world, but as consumers should we be expected the same sort of standard?

Legislative Protection

Commercial arrangements can go wrong for all sorts of reasons, and because these businesses operate outside of the ordinary guidelines, there is a call for consumer protection.

The Labor government has recognised these regulatory issues and has presented the National Sharing Economy Principles which suggests that:

  • New services must support good wages and working conditions.</li.
  • Everyone doing business in the shared economy must pay a fair share of tax.
  • Companies must have appropriate insurance policies to cover consumer and third party risk.
  • Businesses in the shared economy should be regulated by Australian Consumer Law – For example, Legislative amendment in the Competition and Consumer Act 2010.
  • State and local governments should develop licensing and inspection codes specific for each service.
  • Sharing companies should be subject to heavy penalties if they are found to be operating in contravention of laws.

What can Consumers do?

Research! You know those large chunks of text we scroll over just to tick the box down at the bottom? Those are also known as Terms and Conditions, and it may be time we start reading them.

Have a consumer issue? LawPath can put you in touch with a lawyer who can give you the advice you need.


Read the policies of each service provider. Keep in mind that different conditions may apply depending on which country you are in. For example, the High Court of Australia has ruled Google as a simple ‘publisher’, and is therefore not liable for any third party advertising content. On the contrary, Google in Europe has been made liable for content accessible through their search engine.

Conditions differ depending on your location, so make sure to keep your research local.

Read the Fine Print

As most shared platforms identify themselves as market places, not direct service providers, they operate outside the normal guidelines of consumer protection- meaning they can often limit their liability.

Uber drivers are technically not employees, instead deemed as contractors. Uber is therefore not formally liable for poor driver conduct.

Similarly AirBnB state that local laws are the problem of local service providers, pushing the duty on users. For example, in NSW, short-term property rental depends on individual council policy, and it is not AirBnB’s responsibility to double check whether a property is legally renting.

Learn more about property and ride sharing and how to get involved in the upcoming issues of LawPath’s Guide to the Shared Economy.

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