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One of the newest innovations in digital commerce is the “sharing economy,” a term used to describe a variety of businesses that use digital technology to directly match services and goods with customers. In just a few years, these businesses have developed the technology to facilitate peer-to-peer transactions, as well as streamline business-to-consumer transactions, in order to connect consumers with almost any good or service on demand.

Taking advantage of the efficiency of the sharing economy is easy. Rather than pay a high price for something, whether it’s a car, hotel room, or power drill, a consumer can download an app or visit a company’s website and be connected directly to someone in their area who is willing to lend the item for a significantly lower cost.  Through the convenience of electronic payments, items are used or exchanged according to the terms of use. One consumer enjoys the benefit of paying less for the item, while the other is provided a source of income in exchange for use of their property.sharing economy

The sharing economy encompasses an array of everyday necessities. Some of the most popular types are:

  • Ride-Sharing: Several companies compete to provide inexpensive and quick ride services. Upon installing an app, a consumer can summon a driver near their location to bring them to their destination in exchange for a small fee paid on their smartphone.
  • Hospitality/Travel: If you’re looking for an alternative to paying to stay at a hotel, many apps enable homeowners with a spare bedroom or empty apartment to rent these spaces to travelers at very affordable prices.
  • Crowdfunding: Crowdfunding sites allow entrepreneurs to seek donations for a personal project, such as a new game or an amateur film. If an idea is promising, it can quickly gain full funding from the collective weight of these small donors. Crowdfunding can be risky and consumers should watch out for scams.
  • Peer-to-Peer Lending/Banking: A consumer can use these apps to receive small loan services from other individuals, allowing greater flexibility on repayment and interest terms, as well as the possibility of rapid approval and disbursement of funds.
  • Services: Some apps facilitate the hiring of a skilled worker, allowing a consumer to affordably arrange for handymen, movers, chefs, personal shoppers, or delivery persons to complete a range of errands and services.

Before engaging in the sharing economy, consumers should research which companies and apps are the most reputable. Reputable companies should have some safeguards in place to ensure a satisfactory experience for all parties. For some, this may be background checks to help protect against physical or financial risks. For others, it may be a requirement for liability insurance in the event of damage or injury during a rental period or a neutral third party who can help resolve disputes and enforce mutually respectful rules. Consumers should also check the ratings and reviews provided by other consumers. Consumers and renters even have the ability to rate one other, enabling users to know what they’re getting into beforehand.

If you have additional questions, contact the Office of Consumer Affairs and Business Regulation by calling our Consumer Hotline at (617) 973-8787, or toll-free in MA at (888) 283-3757, Monday through Friday, from 9 am-4:30 pm. Follow the Office on Facebook and Twitter, @Mass_Consumer. The Baker-Polito Administration’s Office of Consumer Affairs and Business Regulation is committed to protecting consumers through consumer advocacy and education.

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