Scholar recommends consumer protection laws to combat misuse of data in the sharing economy.
Ten years ago, getting into a car with a stranger was something children learned not to do.
Now, we call it Uber.
According to a recent paper by Arnav Joshi, sharing economy platforms like Airbnb and Uber have disrupted traditional wisdom and conventional regulatory models. These platforms often claim they empower users with convenience, better price choices, and additional income. But Joshi argues that some Airbnb data practices actually exploit users—both those who provide services and those who use them.
The solution, he contends, is to enact consumer and data protection laws specifically tailored to sharing economy platforms.
Unlike traditional businesses, sharing platforms collect a massive amount of user data, Joshi states. He emphasizes that Airbnb is designed so that it “knows everything about everyone” on the platform, and it uses that information to manipulate hosts and guests.
The ability for sharing platforms to collect and leverage user data heightens the need for consumer protection, Joshi argues. In his paper he outlines several potential regulatory approaches to sharing economy platforms.
The first line of defense against platforms that misuse their data should be consumer protection law, Joshi states. For example, in the United States the Federal Trade Commission Act protects consumers by prohibiting businesses from engaging in “unfair or deceptive acts or practices.” Joshi argues that these types of laws should be tailored to sharing platforms to create more transparency about how they use consumer data.
Sharing economy platforms by design collect massive amounts of data, but only show users selected portions of that information, Joshi states. This may not in itself violate consumer protection laws, but he says that companies nonetheless exploit their information advantage in unfair or deceptive ways. For example, Airbnb can remove user reviews that violate company guidelines, or “for any other reason at our sole discretion” according to the company’s content policy.
Some guests have reported that the company altered or removed their negative reviews, keeping a property’s rating higher than it should be. When future guests select accommodations, their behavior may be influenced by these changes—whether a guest is deciding between Airbnb and a traditional hotel, or between different available listings on Airbnb.
Deceptive practices like rating and price manipulation, Joshi argues, should be addressed with consumer protection laws tailored to sharing economy platforms. But he also recommends that regulators classify sharing platforms like Airbnb as “information fiduciaries,” which would impose a “formal duty” not to use their information in ways that harm consumers. A violation of such laws would trigger legal liability for misuse of user data, a powerful incentive to use data transparently and responsibly.
Right now Airbnb and other sharing platforms are anything but transparent, Joshi says. They often selectively share information with policymakers to create misleading impressions and dodge further regulation, he states. For example, Airbnb regularly shares positive information about economic activity generated in communities, stories of hosts who flourish through Airbnb income, and safety records at Airbnb listings.
Joshi argues that this information is incomplete, and regulators should be more concerned about the data Airbnb does not share with them. Treating sharing platforms as information fiduciaries would give regulators more power to demand transparency, Joshi contends.
Joshi acknowledges that the sharing economy has tremendous potential to “have real, tangible contributions” to society, and that regulatory reform is not easy. Regulatory requirements do not only affect companies—they affect the users who depend on them. He also emphasizes that as sharing platforms become larger and more frequently used, they become more essential to consumers. Just as travelers depend on bridges and tunnels to get to their destination, consumers become dependent on companies like Airbnb and Uber as they grow accustomed to the services.
But despite certain similarities to traditional infrastructure, Joshi says, sharing economy platforms leverage a critical tool that bridges and tunnels do not: user information. It is this particular practice that he argues must be addressed.
Finally, Joshi emphasizes that data protection laws are crucial to regulating sharing economy platforms. He states that legislation such as the European Union’s General Data Protection Regulation (GDPR) restrict the amount and type of consumer data that platforms can collect, as well as how they can use those data. Joshi recommends an American equivalent to the GDPR, especially since Airbnb and other sharing economy platforms are headquartered in the United States.
Sharing economy platforms collect troves of information about their users, then leverage that data to maximize profit, Joshi states. He argues that the best way to combat the opaque use of consumer information is to enact laws that require transparency.