Countering Marketplace Deception with Mattereum’s Trust-as-a-Service Platform
Marketplace deception is everywhere, at great cost and risk to consumers and businesses. Regulation alone won’t fix it. Can Mattereum Asset Passports and Product Information Markets help secure trust in B2B and B2C trade?
On October 13, 2021, the Federal Trade Commission issued a Notice of Penalty Offenses to over 700 companies, putting pressure on American businesses to disengage from deceptive practices such as fake reviews and false endorsements or else face civil penalties.
The list of companies on the notice include some of the largest companies in the world across a range of industries, such as Alphabet, Inc. (Google), Amazon, Apple, Microsoft, Shell Oil, Starbucks, McDonalds, and many others. A quick skim through the list gives the impression that almost any household name company actively deceives consumers as part of their ongoing business strategy, at least according to the FTC.
This form of marketplace deception is not limited to B2C relationships. On October 14, 2021, Reuters reported that aerospace giant Boeing had notified the Federal Aviation Administration (FAA) that it had discovered defective parts for its 787 Dreamliner fleet which were sourced by a supplier and manufactured by another company.
These forms of marketplace deception are seemingly omnipresent in trade at all scales. While regulation may be able to get many businesses to more authentically engage with consumers and other businesses, some of these entities are of such a size that they can simply absorb civil penalties en masse and proceed with business as usual.
To combat this endemic deception of consumers, we need a combined effort of effective regulation and technological solutions to secure trust in digital commerce. More specifically, we need to establish standards for consumer protection, and implement the protocols capable of meeting them.
The Mattereum Protocol is well-suited for tackling the challenge of holding companies to account for their stated claims, specifically by offering buyers warrantied claims around their purchased goods powered by an incentivized network of third-party expert certifiers. Let’s explore how Mattereum as a trust-as-a-service platform can help create more authentic relationships between businesses and consumers and between businesses themselves.
How do we build Trust-as-a-Service?
Ultimately, Mattereum is building a system to secure truth in trade at all scales: documenting and offsetting negative externalities, creating a circular economy of reuse, recycling, and upcycling of goods, and designing incentives which align profitability with sustainability. Let’s unpack the Mattereum approach and explore how it would work in B2C and B2B contexts.
Asset Passports: Living Product Documentation
The Mattereum Asset Passport (MAP) is the core mechanism of the Mattereum Protocol.
In short, a MAP is a bundle of legal warranties tied to an object. While these warranties can vary with the object in question, the initial warranty is often some form of identification. Other warranties in a MAP may include authentication methods, carbon offsets, anti-slavery certification, tokenization (or connections to any smart contract or software system), and many others. These warranties are essentially “legal lego” of various contract terms that will range greatly between different asset classes and will accrue around assets over time.
All claims are cryptographically signed, secured, and backed by financial stake, giving all warrantors accountability and skin-in-the-game for their assessments. This framework also provides access to dispute resolution protocols in the event of systemic or commercial fallout via an arbitration clause in the contract.
Asset Passports are not a static structure but a dynamic, living documentation that evolves throughout the product lifecycle. Once this initial documentation is established, we need a suitable incentive mechanism in place to supply and secure warrantied product information without relying wholly on centralized institutions.
Product Information Markets: Breaking Out of the Silos of Separate “Truths”
In both B2C and B2B contexts, trust is heavily centralized. We source our product knowledge from companies either directly or through ratings programs they design and companies source their materials and product information with trade partners or distant multiple-degree connections in their supply chains.
Instead of relying on companies to secure trust and accountability when they are incentivized to stack the deck in their favor and shield themselves from liabilities, we propose a more decentralized, networked solution that can bring in third-party expertise to supply and secure warranties in a structure we call production information markets (PIMs).
In short, a PIM is method of incentivizing truth in markets by allowing industry experts to make money from their niche knowledge and face consequences for erroneous claims. For the crypto-savvy, the PIM model makes use of a cryptoeconomic system — or protocol-based mechanism design — to incentivize a particular set of behaviors within the network, in this case the supplying and securing of production information over time.
Together, the living product documentation and bundle of warranties of the MAPs and the incentive structure enabled by PIMs can help create more authentic B2C and B2B relationships which don’t rely on deceptive business practices at the expense and detriment to many.
Mattereum Trust-as-a-Service: B2C
The Mattereum model is a win-win for businesses and their customers. Any of the 700+ companies listed in the FTC Notice of Penalty Offenses — ranging from tech giants to telecomms to food services — would benefit from embracing a more decentralized approach to securing information and accountability around the sale of goods and services. Fake reviews and shady endorsements simply don’t work well within the Mattereum Protocol. By design, any and all faulty information has consequences.
Companies can take initiative by integrating the Mattereum Protocol into their launch process or wait for their customers to do so down the line. The former option is certainly ideal.
An Asset Passport can be generated at any point throughout a product’s lifecycle. Of course, having a MAP at the beginning of the cycle at the point of manufacturing or even design stage would allow for much more information-rich documentation over the course of time, but MAPs can be created even years after initial product release.
Instead of putting the burden on companies to create and implement their own trust frameworks, they can instead plug their operations into an existing protocol. This makes adoption easier than a patchwork, disconnected solution.
There is a potentially huge long-term effect in this approach. If a credibly-neutral, autonomous, decentralized third-party system for warrantying product information takes off, it will put pressure on businesses to improve the quality and authenticity of their offering. Failure to adapt to the new paradigm will result in a flight of customers to more provably trustworthy competitors.
This is key: product information markets turn the trustworthiness of an enterprise into a competitive advantage in the marketplace while also maintaining regulatory compliance. All in the same system.
Mattereum Trust-as-a-Service: B2B
As above, so below.
While the FTC notice highlights a severe misalignment in the average business-consumer relationship with a list of companies that looks like a library catalog, this trust problem also extends to the deals which happen much farther upstream to the corporate supply chain.
Between mineral and materials sourcing, manufacturing, and distribution, the sheer scale of supply chains makes it difficult to document product information before it reaches digital or physical storefronts.
The only other sources of truth available beyond the manufacturer are the specialist firms which rate and certify objects of a particular domain: fine art, collectible cards, instruments, vehicles, etc. However, these institutions are limited in their capacity by their lack of a shared record of an object’s history. Best case there’s an entry in a single database. Worst case: a single paper certificate.
This disconnected certification system and lack of initiative and coordination in securing product information creates opportunities for even the world’s largest companies — such as Boeing — to be supplied defective or counterfeit parts, components, or ingredients at real risk to public health and safety.
Had Boeing integrated MAPs within their supply chain and production process, they could have paired their incredibly detailed product specifications with warranties supplied by third-party engineering firms and other entities. Clear lines of accountability throughout a vast web of B2B deals.
While we delineate B2C and B2B for explanatory purposes, ultimately the benefits of provable authenticity cascade throughout the entire system. If a business sources materials from verifiable and transparent sources, the company will be less likely to perpetuate faulty parts or information downstream to its own customers.
The goal of Mattereum’s trust-as-a-service approach is simple in theory but profound in its potential: to power a market economy that doesn’t prey on individuals and institutions, while aligning profitability with sustainability.
The cost and optics of civil penalties will get us nowhere. Let’s try something different.
About Mattereum
London-based Mattereum was established in 2017 by a trans-disciplinary team with a track record in designing and launching nation state-level infrastructure and headed by former Ethereum release coordinator Vinay Gupta. Mattereum is building an innovative trust-as-a-service platform for securing trust and liquidity in the sale of physical assets, creating durable secondary markets, and removing negative externalities of trade.
Follow us as we bring the Mattereum Protocol to an expanding variety of markets and industries.
More at: http://www.mattereum.com
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