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Tech Forecast

What Is The Best Way To Keep The On-Demand Economy Safe?

As companies like Uber and Handy race to hire contractors, an echo boom of startups vies to do the work of making sure they're trustworthy.

What Is The Best Way To Keep The On-Demand Economy Safe?
[Photo: Flickr user Todd Ehlers]

In January 2015 alone, Uber says it onboarded almost 40,000 drivers. By 2014, two years after launch, on-demand cleaning and handyman service Handy said it had received more than 200,000 applications, an average rate of more than 8,000 applications per month. And as of April, Postmates had more than 10,000 couriers.

There is a lot of hiring going on in the on-demand economy—one analysis from Intuit predicted that number of workers would grow from 3.2 million workers to 7.6 million by 2020—and it looks nothing like the hiring of decades past.

Companies like Uber, Handy, and Postmates aren’t fielding cover letters from qualified candidates, coordinating interviews with HR, and hiring employees for their service jobs. Rather, these platforms want to hire as many independent contractors as possible, as quickly as possible.

Screwing up this pedal-to-the-metal onboarding even very, very rarely can have horrific results: An Uber passenger in New Dehli was allegedly raped by her Uber driver. An Airbnb user, meanwhile, says he was sexually assaulted by his host, despite the host having had good reviews by former guests.

Customer peace of mind requires some sort of check on just about any on-demand service employee, and traditional background-check companies weren’t designed for that kind of job (or non-job). So predictably, a cadre of startups has popped up to create the trust and safety mechanisms for the on-demand economy.

While a few startups offer new takes on background checks that cater to the on-demand economy specifically, some of them, like Onfido, GoodHire, and Checkr, focus on making traditional-style background checks easy to access. Their systems work on mobile phones, don’t require any paper, and they aim for speed. "Every single day counts because people will go and find other jobs otherwise," says Checkr CEO Daniel Yanisse.

Yanisse and his cofounder, Jonathan Perichon, started Checkr after working as software engineers at an on-demand delivery startup where background checks were a hassle. The company now says it powers more than 300 on-demand companies’ background checks.

Because many workers in the on-demand economy work for more than one employer, another startup, Opus.me, has created a system that gives on-demand workers the ability to carry their background checks and verifications with them. "Work can be fluid," says Opus.me cofounder Philip Charles-Pierre. "So we want to empower these people with verified information that they can take with them as they go job to job." This would also empower on-demand companies to avoid paying for a new background check if another company has already paid for a background check on a particular worker, which would make it a competitive option.

Streamlined paperless checks came under scrutiny when the district attorneys of San Francisco and Oakland pointed out that Uber’s background checks had missed 25 drivers with criminal records. Partly because these on-demand background companies aim to make the whole process virtual and quick, these types of checks don’t use fingerprint data, which would allow them to access the FBI’s database. San Francisco District Attorney George Gascón has said that a background check without fingerprints is "completely worthless." But startups that provide background checks argue that their sources are just as good, if not better. "We go to the source, which is the actual courthouses where the records are kept," GoodHire VP Max Wesman tells Fast Company. Evaluating the efficacy of the different types of background checks is an ongoing debate that has yet to really come to a clear conclusion.

Meanwhile, some corners of the "on demand" or "sharing" economy have eschewed background checks altogether.

Take Airbnb, for instance. Sharing your home or staying in someone else’s home requires trust, but what you really want to know about another user goes beyond safety (the company does not regularly conduct background checks on its users). You also want to know if his house is clean or whether the guests are tolerable people. It’s about reputation.

Startups have new takes on this concept as well. One company, called Karma, launched in May to aggregate users' reviews and feedback from multiple sites into one reputation score. Essentially it uses their behavior across multiple marketplaces and services to create a profile that acts as an argument for transacting with them.

Checkr, too, has been looking into the reputation space.

"In the future, we may try to go upstream and address trust and reputation, which is a little more subjective," says Yanisse. "Instead of just using criminal data and driver's record, it will include more information, more about their work history, their personal behavior, their connections."

None of these methods is foolproof. Uber’s background checks have failed. And traditional background checks used by taxi commissioners have failed. Airbnb's peer reviews have failed. All the competition in the space should, one would hope, help fill the room for improvement.

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