FTC & State AG

Takeaways from the FTC’s Sharing Economy Workshop

Published: Jun. 16, 2015

Last Updated: Oct. 05, 2020

The sharing economy is changing the way we behave as consumers across numerous sectors, and the Federal Trade Commission (FTC) is taking notice. The sharing economy, also referred to as the on-demand economy or collaborative economy, describes the rise in online platforms that enable us to redistribute and share goods or services – think Uber, TaskRabbit, eBay, Coursera, or Kickstarter. The FTC hosted a workshop on June 9, 2015 to learn about the growing sharing economy, its impact on how we think about the consumer-vendor relationship, and the unique challenges it poses for potential regulators.

Workshop panelists heatedly debated the merits of self-regulation and governmental regulation, even assessing which level of government, from local to federal, would be best situated to protect consumers without acting as a barrier to entry or stifling innovation. Recognizing the nascent stage of this eco-system, panelists and presenters focused on which questions the FTC and other regulators should ask to find the “canaries in the coal mine,” that signal antitrust and consumer protection issues, as one speaker, Professor Maurice Stucke, put it, instead of focusing on which regulations to write and impose on this rising part of the economy.

Commissioner Maureen Ohlhausen emphasized that the workshop’s focus was educational and that it did not constitute “a prelude to [a] . . . planned, big enforcement push.” Further, the commissioner stated that she envisions the FTC as a resource for members of the sharing economy rather than an adversary. For now, Commissioner Ohlausen says the FTC sees the sharing economy as illustrative of the potential in free markets for innovative change and urges all would-be regulators to tread carefully before seeing any proof of consumer harm.

Notwithstanding her remarks, the FTC announced a settlement with an individual engaging in crowdsourcing on Kickstarter. Although the action did not turn on issues unique to the sharing economy, as this action is based on traditional concepts of fraud and deception, it is the first settlement involving crowdfunding. In this case, the individual asked for money to make a board game and promised special rewards like specially designed game figurines in return for the funding. However, instead of making the game, delivering the rewards, or providing refunds, he used most of the money for his rent and other personal expenses. This settlement highlights issues discussed at the workshop, including how to implement effective trust mechanisms in the sharing economy and how to best protect consumers.

Photo by Alan Levine from Flickr