The gig economy is a labor market that relies heavily on temporary and part-time positions filled by independent contractors and freelancers rather than full-time permanent employees. The gig economy spans virtually every industry and represents a large part of the workforce. As of 2023, 73.3 million freelancers are estimated to work in the USA, and 76.4 million are expected in 2024.
Examples of jobs in the Gig Economy include:
- Making deliveries from a restaurant
- Driving for a ride-hailing app
- Shopping for or delivering groceries or other items
- Performing household tasks or running errands
Most gig workers access jobs and other resources via online apps or “gig platforms” that connect them with customers. Some of the largest gig platforms are run by well-known companies such as Uber, DoorDash, Instacart, and Upwork. Gig platforms not only connect workers to customers, but they also use proprietary algorithms that analyze data about the worker (e.g., proximity, acceptance rates, past performance) and use this information to allocate future jobs. In theory, workers who are available when needed and have good performance scores will get more and better jobs allocated to them (larger orders, larger tips). Workers who turn down a lot of jobs and have poor performance ratings can be locked out of jobs altogether.
The Rise in Account Fraud Due to Hungry Gig Workers
The gig economy is booming. Competition between gig workers can be fierce, and gig platforms are increasingly challenged to ensure that only qualified and verified workers are serving their customers. In an attempt to land more gigs, some workers are turning to dirty tricks by committing account fraud. Gig workers are purchasing, renting, and using other people’s accounts, or creating multiple accounts to trick and gain an advantage on gig platforms.
Account fraud in the gig economy can show up in various forms:
- Stolen account origination data: Malicious actors steal identity information and use it to onboard fake profiles. This can lead to the person whose identity has been compromised becoming liable for wrongful behavior and to the gig platform onboarding persons who are not eligible for work.
- Fake accounts: Gig workers fake their identities at onboarding to avoid paying taxes or to circumvent work requirements. This could mean that a service is done by a person lacking a work permit, a driver’s license, or who has a criminal record.
- Rented or purchased accounts: Legitimate gig workers “rent out” their accounts by giving their credentials to an acquaintance who is not vetted by the gig platform. The approved account holder receives the earnings, deducts their rental fee, and pays out the account renter.
- Duplicate accounts: Gig workers fraudulently establish multiple accounts to receive more orders and make more money. This type of fraud involves gig workers who use multiple names and phones to avoid detection.
- Bots: Gig workers use automated bots to automatically claim orders, making it harder for legitimate workers to get them.
A Case in Point - Walmart Spark
An August 2023 story by Insider illustrates the extent to which account fraud is impacting gig platforms, in this case, Walmart’s Spark grocery delivery service. In the story, several gig workers describe the widespread use of duplicate accounts and bots, which allowed fraudulent delivery drivers to steal business from legitimate drivers. The story also describes how Chicago-area Spark drivers staged a protest rally over the illegal use of bots on Spark, which allowed fraudsters to automatically claim preferred orders.
Gig Platforms Struggle to Fight Account Fraud
Many gig platforms use some type of identity verification to combat account fraud, but these tactics have not significantly reduced the number of fraud cases. There are several issues that limit the effectiveness of these types of identity verification.
- Secure yet Seamless Experience: First, there is the fact that many gig platforms use lenient practices that allow fraudsters onto their platforms. Many platforms simply do not want to create “friction” that turns away potential gig workers. They want to ensure that their customers are served.
- Dynamic, Adaptive Proofing that Scales: Second, the most common identity verification requires manual labor and does not scale. It is slow and costly for gig platforms to require workers to verify their identity by submitting a government-issued ID, an official payment method (such as a major credit card or PayPal account), a bank statement, a telephone number, or utility bills that verify name and address. Gig platforms may also ask for identity verification on an ongoing basis, such as sending a selfie via the platform app.
- Staying Ahead of Criminal Sophistication: Third, sophisticated criminals can outsmart identity verification using fake profiles and stolen identities. Using readily available resources on the dark web, fraudsters can quite easily create fraudulent worker accounts, circumventing the gig platforms job requirements and terms of service, putting customers and vendors at risk. Criminals are equally skilled at creating fake government-issued IDs, bank statements, and utility bills. They can even compromise biometric verification checks by spoofing or stealing fingerprints and faking facial profiles.
How Verosint Can Help
Verosint enables signal-based identity verification to reduce the cost and friction of detecting and preventing account fraud. At the point of registration and login, Verosint can detect subtle risk signals that indicate potential account fraud and can invoke rules to enforce additional authentication or identity verification.
With Verosint, gig platform providers can automatically detect and block bad actors who try to blend in with the masses of legitimate gig workers. Verosint provides the low-friction approach that gig platforms need to only invoke security challenges only when detected risk is high, keeping the registration and login process fast and easy for legitimate workers. See for yourself with a free 14-day trial today!