So much for trust

There's a growing groundswell of opinion on the left that businesses should not do background checks on their customers - or even on their employees.  In fact, in some jurisdictions, laws have been passed making it illegal to do criminal background checks on prospective renters of property, or certain classes of employees, because this is believed to "disadvantage" people of color.  (The fact that people of color are statistically more likely to commit certain crimes is, apparently, neither here nor there.  That's not a racist statement, either - it's a factual one.  See the FBI crime statistics for details.)

Well, one company has just learned the hard way that taking customers on trust in a crime-ridden city is really not a good idea.

April 15, a Monday, should have been sleepy this year for the Chicago team at Car2Go, a car-sharing service that automaker Daimler AG introduced more than a decade ago.

. . .

There was a spike in rentals for Car2Go’s higher-end cars, Mercedes CLA sedans and GLA sport utility vehicles. And these rentals lasted much longer than Car2Go’s average 90-minute ride—in fact, many of the Benzes weren’t being returned at all. Instead, employees at Car2Go headquarters in Austin watched on a digital map as dozens of their vehicles congregated on a few blocks in West Chicago, in a neighborhood right outside the company’s coverage area.

Car2Go sent several workers to retrieve the vehicles, only to find that a group of thieves had claimed them as their own. Some blocked the vehicles in to prevent repossession; others threatened the company’s employees, according to someone with knowledge of the situation who spoke on condition of anonymity.

. . .

After its failed attempts to recover the cars itself, Car2Go asked the Chicago Police Department for help. By midweek the company suspended service in Chicago altogether, an acknowledgment that it couldn’t figure out how to distinguish legitimate customers from the group of thieves. Kelton says about 75 cars in total were compromised. All were eventually recovered, though some only after being stripped of doors, seats, and other parts.

. . .

The Mercedes plot owed to one strategy Car2Go’s management implemented to draw in new members: making it easier to sign up. For the past several years, Car2Go has subjected all its users to background checks conducted manually by humans. They take a day or two to complete, a lag that seemed onerous to customers used to the immediate gratification that other mobility services offer. “You see Uber or Lyft, or Airbnb, or all the scooters—they all have instant verification,” Kelton says.

The executive team in Europe, where rates of fraud are much lower, was eager to lower barriers to entry. So in April, Car2Go stopped conducting the manual background checks. The company says that on April 13 about 20 people who went on to orchestrate the Mercedes thefts set up some 80 phony accounts in Chicago, using fake or stolen credit cards as their payment methods. It’s unclear whether the timing was a direct response to Car2Go’s policy change or just an illustration of how often its systems were being probed for weaknesses.

. . .

A coordinated attack on this scale was unprecedented, but there has been a near-constant stream of smaller incidents, according to three people with knowledge of the industry who spoke on condition of anonymity because of nondisclosure agreements ... Car2Go ... quickly reverted to manually reviewing new accounts and says it hasn’t had any serious issues in the two months since then.

There's more at the link.  It's a very interesting article, worth reading in full.

The article notes that other car rental companies have experienced similar problems, leading to some services being withdrawn altogether in certain cities.  I'm afraid that's likely to get worse, not better.  You simply can't run a business based on trust (that a customer will return his or her ride in good condition, when they're supposed to) in a low- or no-trust community.  It's a veritable definition of failure.

The question is, what are businesses going to do when more and more cities are becoming low- or no-trust environments?  Solid citizens have been moving out of such areas for decades.  What they leave behind are the people with whom it's a lot more risky to do business.  That's why there are few, if any, supermarkets in such areas - they get robbed blind by their "customers".  In one town I know, there are three Walmart stores.  The first two are in "nice" areas, and have only minor problems with shoplifting.  The third is in an area that's degenerating, and it has many times more cases of shoplifting every day, to the point that I seldom pass it without seeing a police car parked outside to pick up the latest batch.  The manager at one of the other two stores confirmed to me that his regional management were seriously considering shutting down the "problem" store, and/or relocating it to a better area.  You want to know why "food deserts" exist?  There's one reason, right there - and a big one.

Peter