Everyone knows that person. You know, the one you’re not going to loan your truck for moving day, or the one who is last on your list to ask to catsit.
Sure, some people can be flaky friends. But today we’re talking about bad actors. Bad actors are a major threat to trust and safety in the sharing economy.
The first step in protecting your platform from bad actors is knowing what to look for. Once you realize how to efficiently and effectively screen for bad actors, you can lower your platform’s risk—and your insurance costs.
Let’s explore 8 common types of bad actors you’re likely to encounter when screening users on your platform, and the major damage they can do to your business.
When we say “bad actors,” we don’t mean people who have caused accidents on the platform previously. We mean people who intend to commit a crime: people making a profile with someone else's license, people using a stolen credit card, and people with very relevant driving violations.
Sometimes, it's easy to forget that bad actors exist. They might not be part of your daily life, but that doesn't mean they're not out there. Criminals actively seek out sharing platforms as easy targets for their unlawful activities. These aren't just minor inconveniences; they can lead to substantial losses, like vehicle theft, which have a direct impact on your platform's financial health.
While many founders, investors, and users love the utopian idea of a sharing economy, many more hosts and renters are nervous about the potential consequences of bad actors getting onto the platform.
You know who else hates bad actors? Insurance providers. Rather than try a holistic approach to insurance, carriers will either reject insuring the platform outright or charge an incredible amount because of the perceived high risk. Platforms are then left stuck when the cost of insurance squashes their innovation.
It's not just that these individuals are bad for your bottom line because of claims costs. Bad actors can do catastrophic damage to your business. If they aren't covered by your platform's insurance policy, because they're not an allowed user and you didn't do your due diligence, then the entire cost of the claim could fall on you.
Navigating Here are the eight most common types of bad actors you're likely to find trying to gain access to your platform.
This user doesn’t have a license or has a suspended license, so they borrow a family member's or a roommate’s license for registration. Their credit card, address, phone, and documentation are all valid—except for that sticky point of it not being their actual identity.
DigiSure insight: We’ve seen siblings, a parent/child, and roommates use a loved one’s information to register on a platform—sometimes knowingly, sometimes unknowingly. But there’s often one key detail, like an email address, that doesn’t match the rest of the information.
Criminals involved in this type of fraud purchase stolen assets, often online or from criminal networks. They employ various combinations of stolen credit cards, driver's licenses, and more, often accompanied by VOIP phone numbers, to fabricate fake accounts.
“Some of these bad actors are very persistent—and they get very creative. We’ve flagged one user up to 40 times, and those are only the attempts we know about on the platforms that use DigiSure.”
—April Ludwig, Fraud and Risk Operations
Some users attempt to manipulate their identity documents by using software like Photoshop or physical alterations to make the documents appear in their own name. It’s not just teenagers trying to buy beer: criminals are making fake IDs to rent from your platform, too.
DigiSure insight: Common flags that a document is forged include signatures that look like they were typed instead of written, mismatching front/back of identification, and discrepancies between the information the user entered and the information on the document.
Occasionally, a user may book a service on behalf of a family member or spouse using valid documentation without complying with the platform's specific requirements. While the usage may be with permission, it may still violate platform policies and require scrutiny.
In this instance, a user presents a driver’s license from a foreign jurisdiction but is actually a US resident. Maybe the user still hasn’t taken a driver’s test in the US… or more than likely, their US license is revoked or suspended. The number of individuals in the US who are either unlicensed or hold a foreign driver's license (FDL) has significantly increased. As many as 30% of these drivers also possess a U.S. driver's license but falsely claim to have an FDL to avoid having their motor vehicle report pulled and the subsequent discovery of any violations.
DigiSure insight: If a user presents a foreign license but has a US phone number, that’s often cause for further investigation. Any time a user registers with a foreign ID, it’s a good idea to look into it.
Users with valid documentation may rent services, but issues arise when they cannot cover the deductible, often around $2,000, due to existing past-due balances on their credit cards. This situation can result in increased costs for your platform if not managed effectively.
Users with previous felony convictions related to theft may book rental services using valid documentation. Such individuals could pose a risk to both the platform and other users, potentially leading to increased insurance costs.
Some users may pass all compliance checks but have a history of moving violations or engaging in risky driving behaviors, such as using handheld devices while driving. Despite passing the initial checks, these users are 2–3 times more likely to make insurance claims, potentially increasing your platform's insurance expenses.
“For bad actors, fraud is a business. Like any business, they want a strong return on investment. They will only invest so much time if there’s something worth getting out of it. Sharing platforms are a newer business model, so they are trying new ways to take advantage. Our job is to make the industry as a whole less interesting for bad actors.”When we talk about bad actors in insurance, we don’t mean people who are likely to get in fender benders while renting through your platform—we’re talking about people who intend to use your platform to facilitate crimes.
—Karissa Prayogo, TrustScreen Product Manager
When it comes to onboarding new users, your screening process doesn’t cause friction—bad actors do.
At DigiSure, we built our screening process with insurance in mind. When you partner with us, your insurance is underwritten for insurance on your platform. With TrustScreen, we help our partners secure better insurance premiums by showing carriers how they’re actively screening out bad actors.
The unknown risk of bad actors on sharing platforms is one reason your insurance costs feel so high. Learn more about what’s driving these costs and how to control them in our guide, Navigating Insurance Costs in the Sharing Economy.