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Airbnb and the Trust Economy: The Critical Ingredient for Ongoing Success

Airbnb keychain hung on the key hole of an open door.

It all started with Craigslist and Yelp, then blossomed from there. Traditional businesses offer products and services to customers with guarantees and consumer protections. This is not the case with many Internet-based businesses that serve as brokers between customers and various offerings. Instead, these companies exist within a “trust economy” that relies on social feedback and consumer reviews. But as this new landscape evolves, who is responsible when issues arise? In recent months, and on the cusp of a possible IPO launch, Airbnb has been faced with challenges that threaten the notion of Airbnb’s trust and safety. CEO Brian Chesky has had to reevaluate the company’s basic model of operations. While the trust economy has served them well for years, this may no longer be the case.

Airbnb trust economy cartoon
Airbnb will work harder on plucking out the bad actors in their platform.

Concerns Over Airbnb Trust and Safety

On Halloween evening this year, Airbnb was informed of the tragic circumstances surrounding one of its California-based rental listings. At a home rented through the Internet-based platform, five people were murdered at a so-called party house listing. Notably, the horrific event caught the nation’s attention and called into question Airbnb’s trust and safety practices. Not only did this isolated event trigger serious concerns, but it also shed light on other problems regarding Airbnb listings. Suddenly, the environment of the trust economy Airbnb enjoyed began to deteriorate right before their eyes.

The shooting in Orinda, California, highlighted the fact that Airbnb had done too little to ensure consumer protections. Home listings often failed to match photos of properties and the amenities cited. Neighbor complaints regarding “party house” properties went ignored. And hosts regularly failed to comply with standard rental property laws without repercussions. These issues along with other well-recognized host scams unaddressed by the company undermined Airbnb’s trust and safety perceptions. The typical protections that the trust economy offered were no longer considered adequate by a rising number of consumers.

Airbnb’s Trust and Safety Response Measures

For Chesky, recent news has forced a reevaluation of how Airbnb should function in the trust economy moving forward. The response included several new strategies the company will take to better ensure consumer’s views on Airbnb trust and safety. By the end of the year, Airbnb teams will verify all rental listings for accuracy. Using staff, customer reviews, and technology, verifications of property photos, addresses, and listed information will occur. In addition, verification of host identity and the presence of standard safety amenities will be included. And the company will attend to a 24/7 neighbor hotline to take concerned neighbor calls. Each of these will strive to reclaim higher levels of Airbnb trust and safety views among customers and investors.

In addition to these measures, customers will also have a new option to make claims about “bad” experiences. A guest guarantee will be provided that will allow customers to receive refunds or rebook rental stays when issues arise. Airbnb previously had a process by which complaints were assessed. However, in many cases, the outcomes failed to satisfy consumers’ needs. Likewise, operating within the trust economy, Airbnb typically left it up to customers to work things out with property hosts. After recent events, however, Airbnb promises this will no longer be the case.

Are the Advantages of the Trust Economy Declining?

For businesses operating within the trust economy, many typical business responsibilities could be ignored. Presumably, as brokers, companies like Airbnb relied on hosts and guests to regulate one another. This not only occurred through established laws and legal structures. But it also involved customer and host reviews on various Internet and social media sites. If a host or customer received a “bad review,” then this would negatively impact their ability to utilize the services. In this way, the trust economy will establish “social” protections for consumers that replaced business protections. Airbnb’s trust and safety profiles were based on these trust economy structures.

Naturally, it appears that these trust economy protections are no longer enough to ensure Airbnb’s trust and safety among customers. But Airbnb is not alone in this regard. Judicial rulings in California indicate other trust economy companies like Uber and Lyft are subject to traditional employer laws. These companies claim to serve as transportation brokers between contracted drivers and passengers. As such, they believe they should not be held responsible for traditional employee protections. But the courts felt otherwise and did not believe the structure of their business offered such freedoms. In other words, while the trust economy offers some protections, these did not replace existing consumer and employee protection laws. It would appear that the recent Airbnb trust and safety measures recognize these risks. As a result, they are trying to stay a step ahead of potential judicial rulings that may come.

The Tip of the Iceberg for Airbnb Trust and Safety Measures

The steps toward greater Airbnb trust and safety by the company will certainly improve customer perspectives. However, these measures are likely just some that the company will need to consider moving forward. In addition to unreliable property listings and neighbor complaints, Airbnb is facing many other criticisms. Issues related to property owner guest discriminations and host rental property tax compliance are other problems for the company. Likewise, some suggest Airbnb does too little to ensure their listings are not being used for criminal activities like sex-trafficking. In addition to recent scandals, these are ongoing problems that also undermine Airbnb’s trust and safety.

The bottom line is that companies must gain their consumers’ trust in order to thrive long-term. Gaining respect through the trust economy is indeed important in today’s world of modern technologies. But this does not mean traditional measures to ensure consumer (or employee) trust should be ignored. As noted, establishing consumer trust involves doing the right thing and making sure customers receive good value consistently. At an estimated value of $35 billion, measures ensuring Airbnb’s trust and safety shouldn’t be too much of a challenge. And in the long run, such measures will help ensure the company’s ongoing success as it looks to go public.

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