Law in the time of digital matchmaking

Ask people on the street to open their phones for you, and it’s likely you’ll see a range of the same apps: Uber, Tinder, AirBnB, Airtasker.

These apps offer different services, but they’re all based on the same structure of connecting two strangers – a service-seeker and a service provider – via mobile technology.

Platforms of this kind are characterised as  ‘digital matchmakers’ by researcher Neerav Srivastava, currently a teaching associate and PhD candidate at Monash University specialising in law and technology. The platforms, he says, act as a kind of intermediary between strangers: people looking for something, and people who can provide what’s being sought, whether it be a date, a ride, food, accommodation, or even an odd job around the house.

Srivastava is currently researching the practice and law of digital matchmaking. He began his research by thinking about the economics behind digital matchmaking, curious about how this impacts the way the platforms act. From there, he moved into legal analysis. The two areas are intrinsically linked: the business model behind the platforms informs their legal approach.

A foundation of trust

You wouldn’t catch an Uber or go on a Tinder date where the other person might be dangerous. Nor would you stay at an Airbnb that has dodgy reviews. Digital matchmakers profit as information brokers. They tell us who is likely to be safe. For example, when someone books an Uber, they receive a flurry of information, including the driver’s star rating.

“We are brought up not to trust strangers,” Srivastava says. “These platforms foster trust or the disposition to engage in exchanges that involve uncertainty and vulnerability, but are also potentially rewarding.”

The platforms also rely on the ‘network effect’. As Srivastava explains, this means there is a critical mass of buyers and sellers in the market, all converging on the service.

A key factor in the business model of digital matchmakers is the creation of trust amongst all these strangers; this is where factors like star ratings and reviews come in.

“It’s not like they’re just creating a website and then letting people come together; they’re purposefully building these models that help them,” he explains.

The development of models like these has led to the creation of new paradigms for the law, Srivastava adds, along with a number of questions. How do these platforms choose their service providers? Is Uber vetting its drivers, for example?

If an Uber driver is found to be negligent, he notes, Uber can’t be held to be vicariously liable. However, Uber could be primarily liable if the selection of the driver is negligent. It is important, Srivastava believes, to look how matchmaking platforms go about selecting their service providers, and then checking on them on an ongoing basis. If Uber appointed a driver who does not have a licence, the appointment itself would be negligent. Likewise, if Airbnb allowed a host to continue after a complaint of violence, that too might be negligent.

“If the [platforms] are allowing incompetent or dangerous people to come together with people using their services, then that may have consequences,” Srivastava says.

So what should matchmaking platforms be doing to reduce their liabilities?

Srivastava believes this comes down to due diligence. And that platforms should be doing due diligence at two stages: firstly, when allowing a service provider entry to the site, and secondly, on an ongoing basis, to reduce the risk of liability for negligent or negative conduct by a provider.

In the case of Uber, this means ensuring that drivers have valid licences to begin with, and then – as an example – checking that they’re maintaining their adherence to the road rules of their country, like having a valid licence, not speeding and causing a crash, and not driving under the influence of drugs or alcohol.

“Most of these platforms accept that they have some sort of responsibility, that they should do some initial vetting,” he says.

“Where they’re a bit less hands-on is when it comes to ongoing monitoring. So, you sign up to the site, you’ve got a driver’s licence – that’s a fairly basic check, right? But if things go wrong after that and [the driver] is shown to be incompetent after that, how are these platforms managing it? When they’re not doing it properly they might also be liable.”

Where digital matchmaking platforms continue to check in on service providers using their platforms, to ensure continued due diligence, this would reinforce trust too, as users “trust that [platforms] are putting us in contact with someone who is safe and competent.”

“They are profiting off trust,” Srivastava adds. “Doesn’t some responsibility come with that?”

It’s all in the contract

Another area that Srivastava is researching is standard digital matchmaking contracts. No one has the time or inclination to read a standard contract that runs to more than 10,000 words, he argues. Studies now confirm that virtually all users, when faced with dauntingly long contracts, just tick the box and move on.

Should a problem arise, the person affected may look at the contract and find there is an exclusive jurisdiction clause. In fact, Srivastava contends, such a clause may not even be enforceable – but most people are “contract formalists” and would not know this.

“When … people normally look at contracts … they assume whatever’s in the contract is correct. If it says you have to go to California to bring proceedings, they’re just going to think, ‘I can’t afford that, I’m not going to go’. And that’s the end of the matter. The issue then becomes, well, do the platforms know this? And the answer is, yes.”

Another example of this is the unilateral variation clause many platforms’ contracts contain. This is the clause that allows the platform to change the contract terms whenever, and in whatever way, it sees fit.

“That’s just contrary to the whole concept of contract law and is likely to be struck down by an unfair contract terms provision in the Australian Consumer Law (ACL),” Srivastava says.

“But will a normal user know this? Probably not. Platforms are constantly changing their contracts … for some of these, legally, it’s questionable whether they can do that. You’ve got this entire grey market of terms that may not be enforceable, but [the consumer] will act based on the premise that they are. And, of course, these terms are designed in favour of the platforms.”

Users on both sides – service providers and service seekers – usually cop these contract changes with a sense of resignation about their fate.

“This is probably the result of a deliberate drafting culture [by digital matchmaking platforms]. All of this is very intimidating to normal consumers,” Srivastava says. The contract creates “the impression of enforceability”, which diverts attention when a problem arises and a consumer begins to check their rights.

Aside from consumers not understanding potentially unenforceable terms, the ACL assumes that consumers know their rights. Srivastava argues that this should not be assumed.

Fairer for everyone

To make digital matchmaking platforms fairer for all users, one of the steps he wants see taken is for digital matchmakers’ contracts to state up front that nothing they say can be inconsistent with the ACL. A precis of the protections should also be include, he advises.

Currently, Srivastava says, users are looking up the contract only when there has already been trouble, to determine what they can do and where they stand.

He suggests the legal position should be stated at the top of the contract, where it can be easily and clearly understood at the start of the relationship between platform and user. A clearer legal position up front would reduce the ‘information asymmetry’ and allow those using the platforms to understand exactly what their rights are when using a platform.

Srivastava understands why digital matchmaking platforms might need something like a unilateral variation clause in their contracts, but believes platforms should draft them more specifically, and state which areas may be changed at a future date.

In most cases when users have been wronged by a digital matchmaking platform, he suggests, a remedy can be found in common law if specific legislation has not yet been drafted to target the sort of problem the user is facing.

That’s not to say that targeted legislation should not be introduced, but rather that the common law may provide a base solution.

“I don’t really believe that if there is a wrong, the law doesn’t have a remedy,” he explains, echoing Lord Mansfield on common law.

“That sounds great, but is pretty abstract. Trying to explain why something is a wrong in a new situation is no easy matter.”