building online trustThis past weekend I visited friends in the Hamptons.  After a leisurely dinner of grilled shrimp and a few bottles of wine, my girlfriend and I retired around midnight and promptly feel asleep.  But a few hours later we woke up to the sound of voices outside our bedroom window.  I looked at the clock – it was 3 am.  The voices continued and I heard what I thought were footsteps coming up the gravel driveway.  Then I saw the beam of a flashlight out the bedroom window cutting across the lawn. Then I heard a voice call out –

“Who’s there?  What do you want?”  I recognized the voice of my friend – our host – who I assumed was calling from his upstairs bedroom window.

“It’s us. The Reardons.  We’re the people who have rented the house starting August 1st.”

“But this house isn’t for rent,” my friend called out from upstairs.   Hold on a minute, I’ll be right downstairs.  I think you may have been scammed.”

And that’s exactly what turned out to have happened not only for the Reardons (who had just flown in from California to enjoy their 2 week beach vacation) but for countless others up and down the Eastern seaboard who kicked off the official August holiday season in a similarly hapless fashion.  Whereas in year’s past, the summer rental business was primarily handled by local real estate agents, this was the first year that vacation rental market moved decisively online – with a majority of homeowners opting to list their rental properties directly through sites such as HomeAway.com and AirBNB.  As a result of this disintermediation, this also turned out to be banner year for the fraudsters who reaped windfall profits as too many would-be-renters forgot to attend to certain basic precautions.

Along with every major new trend in Internet commerce comes another opportunity for the scammers.    Presumably these rip-off artists will be forced to work harder for their money next rental season since people will be better attuned to the risks.  It’s also worth noting that this presents an opportunity for those legitimate companies trying to develop the new online marketplace — the better quality sites that serve the direct-by-owner online renters can now further distinguish themselves by better educating the public as to the risks and offering some form of verification.  Online disintermediation only works as a sustainable business model if the online competitors figure out how to provide a service that is not only cheaper and more convenient but also free from such blatant scams.

Building online trust requires people to be genuine and consistent. Lawyers who are trying to generate trust with potential clients need to keep this in mind and need to be willing to go provide useful and valuable information without expecting something in return. Lawyers have to think about how to do this just as much as summer rental sites…. As President Reagan is famous for saying – trust but verify!

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