Why Background Checks Are Important For Marketplaces

The very benefits of marketplaces–their social nature, their ability to scale rapidly and their capacity to bring together a wide array of different providers–can also become potential sources of vulnerability. The emerging sharing economy has challenged the long-established status quo in the business world, empowering entrepreneurs to take advantage of these new opportunities and provide their customers with growing freedom of choice. However, the unconventional nature of the resulting peer-to-peer marketplaces has resulted in many owners not understanding the necessary safety measures they should be taking.

In fact, background checks are as essential for marketplace owners as for any other business owner, and here are the four reasons why making background checks standard is crucial for any marketplace entrepreneur.

Background checks help foster a sense of trust in your customer base.

The swift growth of the sharing economy is built upon people’s fundamental social nature; participants in peer-to-peer marketplaces are drawn to these social connections as much as they are to the ability to purchase or sell services and products to one another. However, in order for any sharing economy to be successful in the long term, its customers must trust in the marketplace and feel safe conducting transactions. Moreover, building this sense of trust requires action on the part of the marketplace owner; it doesn’t spontaneously appear. Establishing routine background checks is one of the easiest ways to reassure your customers that they are participating in a safe, reliable and trustworthy marketplace with strict standards in place to protect their peace of mind.

Related: Can the Sharing Economy Open Up to Creatives?

Background checks provide a foundation for rapid scalability.

A successful marketplace depends on the brisk and sustained growth of the number of participants. Despite this need for rapid scalability, many marketplace owners fail to treat their business as one that could quickly become a large-scale enterprise. A standard system for performing background checks can provide a sound and responsible foundation for such fast-paced growth. By utilizing background checks, marketplace owners can be certain that each employee meets key qualifications and can create standards for managing a large group of employees. Moreover, this foundation can provide a blueprint for partnering businesses in other locations.

Background checks help avoid liability for employee actions.

Traditional companies have long understood that they can be held legally accountable for certain actions that their employees take. In general, courts have held that employers have to take “reasonable care” during the hiring process; a trucking company, for example, could be found to be negligent if one of their truck drivers causes an accident while driving under the influence if that driver had a history of DUI.

Marketplaces are not necessarily immune from these concerns. Companies like Uber and Lyft have been fighting costly legal battles over their responsibility for their driver’s actions for causing accidents and assaulting passengers, and their level of liability is still unclear. A standard process for running background checks before hiring can help you avoid any unnecessary legal liability down the line.

Related: How HR Adds Value to Your Marketplace

Background checks can provide a key competitive advantage in a booming industry.

The potential of the peer-to-peer business sector continues to draw entrepreneurs to seek out opportunities in the industry, leading to a boom in the growth of the number of marketplaces. The entire sharing economy operates on certain common values such as community, reputation, and trust. Backing up these principles with tangible proof through the use of background checks can help your marketplace stand out from the rest. In a business environment where multiple marketplaces are springing up around the same idea, any competitive advantage that can make your marketplace more attractive than others to potential customers is crucial.

In general, all companies are dependent on the quality of their people–but nowhere is this more true than with businesses that are part of the sharing economy and driven by peer-to-peer interactions. Background checks may not seem like the most natural standard for marketplaces on the face, but establishing a system for such routine checks can help provide a solid basis for responsible marketplace success.

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