Crowdsourcing Consumer Confidence: How to Regulate Online Rating and Review Systems in the Collaborative Economy

Abstract

The key argument of this contribution is that there is a case for harmonisation of the rules for online rating and review systems at the European level in order to create a level playing field for the collaborative economy. Following the model of the ‘new approach’ which has been efficient and successful in the area of product safety, a flexible and innovative regulatory strategy could be a combination of an EU Directive, which defines ‘essential requirements’ for trustworthy and fair reputational feedback systems, and a harmonized European service standard which spells out the legal and technical details.

Following a short introduction, Section 2 explains how reputation systems can contribute to the development of generalised trust among users of sharing economy platforms and thus complement existing regulatory tools for enhancing consumer confidence. Section 3 gives an overview of current regulatory initiatives regarding online ratings and reviews at national and EU level. Section 4 presents the idea of a European standard for reputation systems and outlines key elements of a future European regulatory framework.

Keywords: platform economy, collaborative economy, sharing economy, peer-to-peer economy, digital single market, reputation systems, online reviews, online ratings, standardization, service standards, new approach

JEL Classification: D18, D40, K00, K12, K20, K21, L10, L15, L40