This article is written by Mehnaz Khatoon of 9th Semester of Aligarh Muslim University Centre Malappuram
ABSTRACT
In order to optimise their functionality, the sharing economy seeks to disperse already-existing items (such as tools and automobiles) among the populace. In sharing economies, there may be monetary exchange (as in the case of Uber, Airbnb and BlaBlaCar) or there may be altruistic exchange (as in the case of timebanking and couchsurfing). However, sharing economy platforms primarily serve as online marketplaces that link supply and demand. Numerous publications have appeared in response to the growth of sharing economy practises. As a result, the sharing economy concept is conceptually unclear. By adhering to the paradigm for Exploring the Legal Challenges Of Regulating The Sharing Economy, Such As Uber And Airbnb, this article seeks to address this issue.
Keywords: Sharing economy, Legal Challenges, Uber, Airbnb, Lyft, Doordash.
INTRODUCTION
Whether one is a consumer, host, or driver, the sharing economy presents a wide range of opportunities. There are still some unresolved legal and security issues, though.
Due to the fact that current regulations are still catching up to how the sharing economy works, companies like Airbnb and Uber operate in legal limbo. This new economy has disregarded housing standards, flouted traffic laws, and sparked labour problems all over the world. In addition to legal concerns, there are concerns that the major sharing economy players are not doing enough to secure the security of its patrons, hosts, and drivers.
THE SHARING ECONOMY: WHAT IS IT?
A business concept known as the sharing economy allows people or organisations to exchange resources, goods, and services with others. Technology platforms are essential to the economy because they enable interactions between suppliers and customers. Ridesharing services like Uber and Lyft, home-sharing services like Airbnb, and peer-to-peer financing platforms like financing Club are a few examples of economic services.
HOW SHARING ECONOMY WORKS
The sharing economy functions generally through reciprocal cooperation. People can connect with one another to share services or goods via digital platforms like websites or apps.
One of the most well-known applications of the sharing economy idea is Uber. The Uber app is opened, and the user enters their destination. An Uber driver, an independent contractor, or a gig worker is linked with the rider and provides transportation to their location. The driver receives a base rate from Uber in exchange for utilising their own vehicle and their time, and the rider may leave tips. Meanwhile, the rider gains from being able to travel to their destination by using another person’s car.
It has been challenging to regulate the sharing economy at the federal level since it encompasses so many different activities. Among the most important issues brought up by state and federal authorities and lawmakers are:
- The security of those who take part in sharing economy activities, including both drivers and users of ridesharing services.
- The categorisation of gig workers under labour legislation.
- Taxation of businesses that hire gig workers and gig workers themselves.
- Disparaging behaviour
Ride-sharing and holiday rentals are two of the sharing economy’s most significant sectors to come under regulatory investigation. Regulations that would have forced Uber and Lyft to classify drivers as employees were fiercely contested. While this is going on, Airbnb hosts must understand the local laws and ordinances governing short-term rentals.
VARIOUS SHARING ECONOMY CASE STUDIES
As previously indicated, two of the most prominent instances of the sharing economy are ride-sharing and short-term home rentals. For instance, Airbnb enables house owners to briefly rent out all or a portion of their residences to strangers.
This is how it goes. Homeowners with surplus space can connect with those who want to rent it through an online platform like Airbnb. When someone leases a home in its entirety or just a room, they pay the proprietor directly, and Airbnb receives payment for facilitating the transaction. Similar functionality can be found on other vacation rental websites like Homeaway and Booking.com.
Other instances of the sharing economy include:
- Workspace sharing, such as that provided by Wework
- Resale using applications or websites, such as eBay or LetGo
- Websites for crowdfunding, such as GoFundMe
- Websites for peer-to-peer loans, such as Prosper or LendingClub
- Apps for renting equipment, such as Sparetoolz
- Rental clothing businesses like Rent the Runway and Tulerie
- Delivery services such as Seamless or DoorDash
- Grocery delivery services like Postmates and Instacart
LEGAL CHALLENGES
The three main factors that have contributed to the success of sharing economy businesses are their utilisation of underutilised or idle capacity, their reliance on technology, and the unique user experience they offer. These businesses, however, operate in industries that are either not yet regulated or in which it is unclear how regulation should be implemented, and as this market develops quickly, new problems keep coming up.
Companies in the sharing economy encounter restrictions in three main areas:
- Consumer interest protection: Is the regulator required to go above and beyond the platforms’ built-in facilities for collecting feedback on consumers’ experiences? Consider the case of UberPOP. The Uber driver provides the same service as a taxi driver under this business model, but neither the Uber driver nor Uber must conform to the licencing and liability requirements that taxi drivers must meet. Due to the fact that the full expenses of the service are not internalised, Uber has a competitive advantage. Who, for instance, is responsible for customer damages in Uber collisions?
- Labour laws: How may labour laws be formulated to encourage a workforce for the sharing economy while upholding legal regulations and restrictions? This problem affects transactional platforms for professional services like Upwork. While volume, speed, and transparency are advantageous to freelancers, they must also fight with the pricing battle. A minimum salary or how they can pay for social insurance within their hourly rate are not discussed. In fact, the established and disrupted industries are frequently the ones whining because their services have become commodities.
- Taxes: Can the state capture a reasonable portion of the value contributed by the sharing economy using the current tax structures, which are efficient and effective? No, is the response. Customers who stay at hotels must pay a lower value-added tax and a tourism tax in various nations. However, companies like Airbnb and others tend not to be subject to these restrictions. Since the proprietors of the accommodations are untraceable, neither Airbnb nor its customers are required to pay taxes on this income.
THE SHARING ECONOMY: PROS AND CONS
For consumers and gig workers, the sharing economy has both benefits and drawbacks. Here are the Pros and Cons of a shared economic paradigm.
PROS
- There may be a price drop for goods and services
- Gig employment can generate additional revenue
- Expanded availability of goods and services
CONS
- Employee and consumer safety worries
- There may be issues with a lack of regulation
- There may be threats to data and privacy.
PROS EXPLAINED
- Possibly reduced costs for goods and services: Sharing resources may result in lower prices for customers. For instance, sharing rides for $20 a week might be less expensive than buying, insuring, and maintaining a car.
- Gig labour has the potential to generate additional income: One in three Americans has at least one side job, and many of them are employed in the sharing economy. If you receive a pay reduction or find it difficult to maintain your standard of life due to stagnant wages, gig work may be able to help.
- Greater accessibility to products and services: The sharing economy may make it simpler to get hold of goods or services. For instance, you might have used a food delivery service to keep your pantry supplied if you spent the majority of 2020 keeping at home save for really necessary outings. The sharing economy is known for providing convenience like that.
CONS EXPLAINED
- Safety issues for both employees and clients: There are safety dangers associated with gig employment and recruiting gig workers. For instance, a 2019 Uber safety study found that between 2017 and 2018, there were approximately 6,000 sexual assaults and 19 fatalities involving both drivers and passengers.
- The absence of regulation can be detrimental: Both gig workers and consumers who use sharing economy platforms may experience uncertainty as a result of changing rules. For instance, if you rent out a room on Airbnb, a sudden change in local legislation may reduce your ability to generate money.
- Risks to data and privacy could exist: People who use platforms for the sharing economy are also concerned about cybersecurity. If your information is not securely protected, sharing it with an app can be dangerous.
CONCLUSION
The sharing economy is based on trust, and part of that trust is having confidence in the security and legality of these services. The sharing economy will endure as long as these businesses uphold this trust.
REFERENCE
- “Sharing Economy”, available at: https://www.researchgate.net/ (last visited on July 10, 2023)
- “Sharing Economy”, available at: https://www.vakilsearch.com/ (last visited on July 10, 2023)
- Sharing Economy”, available at: https://www.thebalancemoney.com/ (Last visited on July 10, 2023)
- “Sharing Economy”, available at: https://www.gcfglobal.org/ (last visited on July 10, 2023)
- “Sharing Economy”, available at: https://www.a.connect.com/ (last visited on July 10, 2023)
- “Sharing Economy”, available at: https://www.policyreview.info/ (last visited on July 10, 2023)
