Class Action Being Filed Against Airbnb On Behalf Of Airbnb Hosts
Airbnb recently changed its cancellation policy in light of the Coronavirus. It allowed all of the people cancelling their trips to just cancel and get their money refunded.
This pushed 100% of the Covid-19 losses onto hosts.
Calling all @Airbnb hosts that have been robbed by @airbnb‘s arbitrary decision to change its cancellation policy making #hosts bear 100% of the losses due to #COVIDー19.
We are building a class action lawsuit.
Please connect, we have much to discuss.
— Airbnb Host Class Action (@AirbnbHostClass) March 15, 2020
(Featured image is “classroom 2nd fl” by cayoup. Used under creative commons license.)
Ah American business will never fail at finding ways to push the burdens lower.Report
Probably convinced themselves that they were doing the right thing in response to the crisis.
I wonder, what would be the legal argument? Breach of contract? Hope that contract wasn’t written like a credit card contract.Report
I’ll go out on a limb and guess that the contract is written in terms that tilt all the risk to the host and all the profits to AirBnB.
In entirely coincidental news, young folks think more highly of socialism than capitalism.Report
Not saying you are wrong, but I fail to see how socialism eliminates such ‘abuses’ of contract.
And, of course, we always come back to socialism has it’s own host of ills society must contend with.Report
My experience with Airbnb is pretty much limited to two things.
1. When we went to PEI a couple of years back, we stayed in a lovely rental cottage close enough to the ocean to see it and hear it. We got that through Airbnb. It wasn’t a year-round home. It was intended to be a summer cottage. It would have been a rental property available to people wanting to stay on the island no matter what… but we rented this rental property through Airbnb.
2. I got a new set of glasses recently at Costco and the nice lady checking out my eyes told me that she ran an Airbnb. It was her guest bedroom and the overwhelming majority of the people who stayed with her came in, sleep in her guest bedroom, then got up and left. They didn’t use her spare bedroom as a staging area for them doing tourist stuff. They used it as a place to sleep and it was rare that someone used the room two nights in a row. She said that she spent about an hour every day changing bedclothes and getting the room ready for the next guest. It helped her make a little extra money.
So my thoughts about Airbnb were pretty much limited to that.
This class action only came to my attention because this tweet (or one showing the same clip) made it to my twitter timeline:
My initial response was that the guy had a point, kinda. They had a contract and then, next thing you know, Airbnb alters the deal. Then I saw this tweet (apologies for the strong language):
And reading the story he talks about (the brother who owes $50k in rent), made me wonder how much of an impact Airbnb has on housing. Which made me notice when this tweet made it into my timeline:
One of the responses to the tweet in the post used a term I’d never heard before: “Superhost”.
Apparently, Superhosts are really, really going to take it in the shorts.
But I feel bad for the lady who rented out her guest bedroom for a little extra income.Report
Seems that has an easy fix – verify ownership. You can not rent what you do not own. I doubt AirBNB (or the like) would voluntarily enforce such a rule, but it strikes me as one of those simple things that can be done at any level of government and it satisfies multiple issues.
Your bedroom renter can still rent the bedroom out, and cities might find a surplus in housing.Report
The term that I kept remembering was “Margin Call” as I read about that.
These guys were buying stocks on margin. It’s 1929, all over again.Report
Yep, it’s the risk you take anytime you play with someone else’s capital. It’s all good as long as the bubble is bouncy, but when it pops…Report
You don’t expect us to have three hundred and seventy-four million dollars in cash?!Report
The problem is, the thing you’re proposing, which is something even my fellow leftists I have no issue with (ie. renting your extra bedroom because your kid is at college, renting your whole house when you’re on vacation, etc.) isn’t a business that can be valued for multiple billions by VC’s and pushed as a replacement for hotels on CNBC and more importantly, a replacement for actually renting homes out to normal people in cities.
The concept of AirBNB is perfectly fine. Actual AirBNB that gets buckets of SV money is…well, what we’re dealing with now.Report
“Seems that has an easy fix – verify ownership.”
Or only allow Airbnb providers to make one property available to rent. You don’t need to worry about the issues caused by superhosts if you don’t let people be superhosts.Report
It does seem like an easy fix that also could have been fixed a long time ago. My guess is it wasn’t fixed a long time ago because it had an inflationary effect on the rental market that made things look really, really good. Now, it seems iffy whether airbnb bounces back from this. I do think the retired widows who are renting out their spare room as a b&b will pull through because the ones I know have other sources of income.
As a sidenote, my roommate is an artist whose side hustle is cleaning airbnbs for people who run them here. She’s out of a bunch of jobs but isn’t panicking because she’s got a slew of side hustles and saves money.Report
I wouldn’t expect AirBnB to apply the fix, they have no such incentive. But I would expect governments to do a little investigating and apply the fix at some level, especially if they are having housing issues.
Bans and taxes always struck me as stupid. No one is going to offer up their spare room or MIL apartment as permanent housing to alleviate urban housing shortages.
But catching people doing illegal (or at least unauthorized) sublets…Report
I dunno, Airbnb really bailed hubby and I out when our condo got wrecked by water Damage in December. There was a place across the street we were able to get on short notice for a long stint and the price wasn’t too bad (after the delighted host applied a discount for us staying for multiple months). We’ve had a lot of pretty good experiences with the service. I have no doubt, though, that their agreements are written to advantage Airbnb. The only thing the website gets out of the transaction is their service fee after all.Report
Yep. The “gig economy” (which kinda-sorta includes Airbnb on the fringes) isn’t bad in principle. I certainly like being able to call a Lyft whenever I want. It makes city life much better — as I don’t own a car and never worry about parking. However, it brings to the front the cruel logic of capitalism. Namely, it creates a new kind of underclass. Venkat at Ribbonfarm wrote about workers stuck “below the layer of the app,” meaning people who would be exploited by profit-maximizing algorithms.
It’s a real question: can we have the convenience of Lyft and Airbnb while still respecting the humanity of everyone involved?
I dunno. I’m pretty sure centrally controlled state socialism would be much worse. However, we could do much better. It’s a moral thing. It’s about how we build communities with other people.Report
I feel ya. I think the idea Airbnb and -especially- Lyft/Uber is predicated on the idea that the drivers and space renters are highly informed and rational economic actors who can weight the costs and benefits dispassionately. I’ve been told that if you factor in wear and tear on your car then the rideshare platforms are fleecing you and most drivers should certainly refuse to drive for the money they’re getting. Still, at the moment Uber and Lyft primarily are serving as wealth transfers from venture capitalists into the pockets of rideshare customers like you and me. It’s hard to get angry at them for doing that but, yeah, the drivers should probably all demand en masse that they get a higher payment (which would necessarily drive up user costs).
I feel a bit better about Airbnb. I mean at the positive end this service is genuinely enabling utilization of what would otherwise been idly resources. The spare room, the extra couch, these things just wouldn’t be available to the public absent an Airbnb like platform. I can feel the anguish when people are screaming about short term rental displacing longer term rental in high demand areas but again and again and again this ultimately boils down to “pull your head out of your collective asses and permit more housing to be built in those areas you dips!”
But, yeah, there’s definitely a moral element. Should these platforms be able to employ people in the manner they do? But it can be flipped around to Should people be forbidden from working this way when they otherwise would choose to? I mean no one is forcing anyone to try and make a career out of doing gig work. On the other hand if that’s all you can find? And around and around it goes.
It must be fascinating for you, though, since you work in airline algorithms and presumably that kind of predictive math is the bread and butter of sharing platforms as well.Report
Arguably, no one was “forced” to work in coal mines where they got black lung disease. However, in a way the system gave them few better choices. The point is choices are constrained.
It’s easy to look at someone driving a Lyft and explain all the ways they could have made different/better choices. However, we need to ask if things are “working well” when so many people end up doing exactly that. Why do they do that? Why are the bad choices so widely chosen? If the economy in fact stratifies into tiers, is that a desirable outcome?
Note, I don’t want a “nanny state.”
Instead what I want is for the “yay free markets” crowd to understand that the invisible hand isn’t real. Capitalism is an amoral process. It will do whatever it will do regardless of how we feel about it. This isn’t good. It’s not ideal. It certainly isn’t optimal. It will as easily wipe out a million lives as it will provide conveniently microwavable Hot Pockets.
The practical lesson: don’t get trapped working below the level of the app.
The bigger lesson: what the fuck are we doing?Report
Yep, I’m on board, a holistic practical approach makes sense to me too. It’d also be a different conversation if gig companies were making money hand over fist but, of course, they aren’t. They’re by and large sucking cash from rich venture capitalists and giving it to customers (in the form of cheap rentals and cheap transportation). That isn’t helping the gig workers much but it really complicates the narrative.Report
I agree it is hard to have much sympathy for the VC crowd, which from the outside looking in seems like a stew of narcissistic fucktrumpets.
But that’s what capitalism looks like in our modern age of narcissism. It’s a lottery profession that doesn’t require much talent, only image (and a healthy chunk of cash, usually acquired from parents or lucky timing in the stock market).Report
The only goods worth having are positional.Report
I for one can’t wait for my designer ventilator and tailored PPE. And my corona vaccine better be shiny then my neighbors.Report
I have no doubt that after all of this the “narcissistic types” who got sick will be bragging about how sick they got. Those who didn’t get sick will be bragging about how healthy they are (but they’ll secretly resent those who got sick, just as I’ve met str8’s who resent queer people because at least we have an interesting story).Report
Really? I say [citation needed] on that.Report
Airbnb isn’t necessarily new. Before World War I, it wasn’t uncommon for people who owned or even rented homes to take on borders to earn some extra money. Especially if they lived in a summer resort area. The practice was eventually legislated of existence and people also started to earn enough not really to need to do this. Even before AirBnB, there was a thriving market in not necessarily legal rentals of apartments for people who were going to be away for a long time. When I stayed in Paris over Christmas-New Years once, it’s how my friends and I stayed. It just was more complicated to arrange than with AirBnB.
My big problem with the pro-rideshare crowd is that they see ride shares as a good enough replacement for an actual public transportation system, which they don’t like because they involve government and unions. A bunch of people using rideshare apps creates just as much congestion as the one person per car type driving that usually occurs. What you need is more rail transit because it’s easier to get people on a train than a bus.Report
Sure, except trains cost a bajillion dollars to install anywhere that they’d be useful.Report
We had cars for about a century before we got Uber. If cities that failed to build rail transit for a hundred years without Uber continue to fail to build rail transit for ten years with Uber, Uber’s probably not the main issue here.Report
Rideshare apps were able to become a thing because taxi services were so hide bound and not necessarily great to their employees either. I’m as far from threatening as possible and I got into tremendous fights with cab drivers trying to get from Manhattan to my place in Brooklyn because the cabbies wanted to get a return fare.Report
As I’ve said before, it’s the over-focus of modern corporations on shareholder value. Shareholder value is important, but if that concern drives the bulk of your business decisions, it’s going to cause problems just as readily as being overly focused on employee satisfaction, or customer satisfaction, etc.
Things must be balanced.Report
Vaguely related, according to how my brain works:
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The owner could, of course, walk away from the property and let the bank take care of it. They won’t get any more money from the property, but they aren’t getting money now; and if they let the bank take it back, well, it won’t be the owner evicting people, it’ll be the bank, and everyone already hates the bank, right?Report
Holy cow, the replies in that thread. It really is so sad seeing the failures of our education system come out in financial understanding.Report
Something to consider:
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But are the replies fake? The initial posting might be hoaxy, but it isn’t that different from a hypothetical posed by a professor. Seeing the reaction in real time, on the other hand…Report
If it was fake once, it’s been memed into reality now.
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Win/win?
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I mean.. it doesn’t say how much they’ll be charging them.Report
Even if it’s free, I think that that’s one hell of a write-off.
Assuming, of course, the Superhosts see a piece.Report
Well yeah that’s the thing. Like, if you rent an Airbnb the host gets the rent and Airbnb gets just a modest fee. So if Airbnb is providing it free then that’s like, 5% off the normal rental price or so. Obviously if Airbnb is paying the hosts their portion but not charging it that’s a different story but I don’t know how Airbnb would go about doing that. I guess they’d just book them themselves?
Suffice to say: more info needed.Report
Looks like they’re just waiving the fee, although from what I could find it’s quite a bit more than 5%. Apparently they charge host 3% and guests a fee in the 10-20% range depending on…factors. I don’t know what they are.Report
An excellent point, well done.Report
I really hate the phrase “write-off,” because it encourages people to think about tax deductions in a deeply misleading way. If you pay a marginal tax rate of 25%—reasonable for a US corporation—then a $1,000 “write-off” only saves you $250 on taxes. But you spent $1,000 (or gave up $1,000 in revenue) to get it. It still costs you $750 on net.
Charitable deductions are not some major profit center for corporations, or even costless.Report
Particularly since Airbnb apparently lost money in 2019 (at least as of the third-quarter, a net loss of $322 million was reported by WSJ, compared with a profit of $200 million the previous year). Its quite possible that 2020 isn’t looking too good either.Report
Interestingly, the second thing to come up in a Google news search was this:
https://www.vice.com/en_ca/article/5dma7q/after-years-of-hoarding-housing-supply-toronto-airbnb-hosts-are-panicking
We get a lot of people who move here because housing is so scarce and unaffordable in Toronto. I’m not sure what impact this will have there, but I’m guessing it’s going to be more than “none”.Report
That’s good, maybe it’ll disrupt the self perpetuating circuit of building restrictions and short term renting. If ya restrict the supply in those high demand areas then short term rentals are going to flower there like fungus because they’s the highest return use.Report
North. Not sure what you mean here in terms of building restrictions. Our city rezoned all of its downtown so that just about anything could be built up to 30 stories. Previously, it had been fairly low because everything was zoned back in the 70s. So, our supply has increased quite a bit- for luxury condos. That’s what’s getting built in most cities.Report
I believe you, but that’s an already dense area that’s difficult to build in. I’d be looking at the areas immediately adjacent to the urban core which are, often, rather low density tony wealthy kind of places where you’d have to defeat every person on the block in unarmed combat to so much as add an accessory unit over your garage.
But if they’re building lots of luxury condos then it isn’t going to take long for that market to glut out. The ample money from Asia and Russia that is comfortable parking itself in a vacant condo and just letting it sit is mostly a ghost of the past now and municipalities are getting wise with vacancy taxes and the like.
Housing is such a molasses slow market to develop but the prices should stabilize or come down. This corona thing may even accelerate it, who knows.Report
My question would be first of all, is there enough traffic to support the levels of AirBB? And second, if so, is the problem actually AirBB, or rather a lack of hotels and other short term housing? And does this have a trickle down effect of reducing long term housing supplies?
There is a lot to unwind in all of this, but I am afraid that we stop at the first thing that catches our eyeReport
Aaron David- Yes, traffic to Toronto absolutely sustains the levels of AirBB. It’s the “New York of Canada” I’m told, although honestly, as an American, I think if it as the Minneapolis of Canada. Toronto is like the Tragically Hip- if you grow up in this country, it seems like a much bigger deal than it does anywhere else.
No, I really don’t think there’s a lack of hotels in Toronto. And, yes, I think “ghost hotels” have a definite effect of reducing long term housing supplies there.
I don’t know if it’s the same in this city, although like I said my roommate cleans AirBBs here, so they must exist. I don’t know who would want to travel here, frankly.Report
Then it strikes me that there is something holding up building hotels, and more affordable housing. From your comment to North up above, it might be that the downtown rezoneing is helping, but that the bottleneck that occured over the last 40 odd years is still working itself out. Or, there might be other restrictions that are less noticable. One thing I am afraid of is that quite naturally people will go to where the money is and where they have experience. And if that has been in solely one sector of the market for decades, it will take time to get the engines of commerce to turn to other areas.
But I get you about it being the Minneapolis of Canada. Not much really compares to one of the true megalopoli.Report
What’s holding up building more affordable housing in this city and nearly every city in this region is developers want to build luxury condos because it’s a quicker return on investment and probably a better one than building some affordable apartment building and collecting rent for the next 30 years. Even if the condos are unoccupied, they’re sold, so what does the developer care? There’s just no incentive to build affordable housing, and definitely none to build low income housing now that professionals would rather live in the downtown of cities than in the suburbs. The irony is a city like ours, which was a dead zone as recently as ten years ago, is now effectively a suburb for another city.Report
But, the long and short of it for Toronto and here is they’re building condos, condos, condos, and the increased density is not lowering housing prices. In Toronto, it’s been estimated that 40% of the condos are investor owned, so unoccupied. https://torontostoreys.com/toronto-condos-investor-owned/
Here, they’ve taken so long to build them it’s hard to tell how much they’ll help. The new condo building on my street looks about 70% unoccupied, but the REITs are mostly focused on snapping up older apartment buildings and jacking the rent.Report
That’s what Aaron means by, it’s going to take time for it all to shake out.
If local government wants affordable housing built, they are going to have to offer up incentives to get things moving faster, both in construction and maintenance costs (a 30 story condo tower requires nearly the same level of maintenance whether it’s affordable or luxury, and that cost is either baked into the rents, or is subsidized).
And if those incentives aren’t working, they have to figure out why (we’ve had at least one post showing that the ‘strings’ on affordable housing grants in the US are often considered more trouble than they are worth).Report
One thing to remember is that if contractors and developers have been building one type of living unit for decades, then they are going to keep seeing that as what to build. They have tuned their companies, their buying process’ and everything else to this. Unwinding that alone will take time and new blood coming into the construction scene.Report
That and reputation/branding. If a developer is known for building luxury high rises, are they going to want to take on an affordable housing project?Report
As a for instance, my brother (who is in that field) made a lot of good money being the only person in his small city post 2008 who was hot to take on garage conversions and small additions, while all the big players where still trying to build lux spec homes.
Same basic story, they had all started small, grown, and were unable to adapt. Thus allowing smaller companies like my brothers (one man) to come in and make a go of it.Report
There are going to be sooooooo many dissertations to be written on economics for the next 5 decades.
I can’t wait to read them.Report
Edit: This is a reply to Rufus’s 9:19 comment above, claiming that 40% of Toronto’s condominiums are unoccupied.
As pointed out in the second sentence of the article you linked, investor-owned does not mean unoccupied:
The vast majority of investors are going to be renting out their investment housing, because not doing so is throwing away money.Report
As a renter whose plans were cancelled due to Covid, and who then subsequently cancelled my booking (sorry, not interested in staying in a crappy neighbourhood in Toronto for no reason when absolutely EVERYTHING worth visiting will be closed, and oh PS its a GLOBAL CRISIS). While the time at which I placed the booking and the check in date falls within the clearly defined outline of the AirBNB “extenuating circumstances policy”. I cancelled with about a 2 month lead time on the booking (the day the event was officially cancelled), yet Airbnb refuses to honour their policy by returning ALL of my money (per their own $%*# policy!), and the host refuses to refund the money due to his “policy is policy” strict cancellation policy. If it were not for the crisis, I would not have be forced to cancel my booking. And I”m the asshole for expecting that people (yes, even Airbnb hosts) would be reasonable and decent in light of A STATE OF EMERGENCY. What do you call someone who unabashedly takes advantage of a very terrible situation to withhold money for a service not rendered? No offense hosts, but if you’re entire lifes income is based on taking money, in trust for a service to be rendered, before any such service is actually given, that is a business model built on sand, is arguably criminal in many regards, and is (thankfully) doomed to fail. What other sectors are services offered in trust for advanced payment, that the money can then “legally” be withheld for after NO SERVICE IS ACTUALLY GIVEN?Report
What you fail to understand is that we blocked our calendars with AIRBNB garbage and every other vacation rental site stood by their hosts (now all other sites have priority and air bnb folks don’t get anything but bad attitude). Without the host you wouldn’t have anything to rent. And each home/owner has a right to put their requirements and contracts on line and its up to you to decide if you want to rent or not. You don’t like my no refund policy move on please. I’m not a Hilton and offer much more for much less. Stay at a hotel next time that can afford to eat your refund. In good faith I accepted trash from Air bnb and allowed that crap to fill my calendars and no more auto bookings (turned that off immediately) and everything isn’t approved until the 23rd hour since other websites that supported us are now top priority . I’m about a month from dumping all my accounts with Air bnb That’s ok….Brian and the rest of the gang can kiss my rear end as their sales fall and plummet and they have continued to do so. Their little token gift of 25% is insulting and on top of that they make you wait for a month or more. I’m also not an airline getting a big bail out. What comes in goes right back into our home, supplies, three previous employees (yep, had to lay them off. Thanks Brian!) and what ever is left over covers my rent, food and expenses without a vacation for 7 years. Now I’ll most likely be barely making it through the year but a GRATEFUL for the websites such as HomeAway and VRBO that made it possible for me to just make it thru the Fall. I’ve since dropped rates almost half off on the other websites and AIRBNB is on the way out very very soonReport
One third:
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I wonder what the percentage of people who didn’t pay April Rent in 2019 was. One of the people in comments says it’s 20%.
Which strikes me as high to the point where it strains credibility. (But I’m also sure the number is not zero.)Report
If you are looking to stay in the loop on claims against Airbnb for extenuating circumstances refunds and cancellations, you can do so here.
https://www.traverselegal.com/airbnb-coronavirus/Report
I want to make sure I am part of this. Airbnb continues to take advantage of me. They have even changed my cancellation policy and have lied that it wasn’t changed by them. Then how did it get change? They keep sending refunds even when they know I have a very strict cancellation policy. They are really unprofessional.Report
Airbnb we’re booking short terms in FL while min 30 days were allowed in violation with State law. Also they take advantage of hosts constantly by not allowing hosts to charge damage deposit for damages done by their guests. Airbnb violate their own terms.Report
On one of my jogging routes, I go past an empty lot that has a sign in front of it saying something to the effect of “CONDOS PLANNED” and a drawing of the 4-unit building that is planned (or was planned) for the lot.
The sign predates the Coronavirus, for the record.
At the beginning of the George Floyd protests, someone wrote on the sign a plaintive question: “CAN THE HOMELESS LIVE HERE?”
After a summer, the sign is still there and the marker used to write the question has faded to the point where you have to squint to look for it now.
No movement on the construction.
I wonder if the intention was to make AirBNB units, or units suitable for leasing out to the Juniors/Seniors at the local college, or starter units for just-married young adults just starting their place in the world and they want to do it biking distance from downtown.
The lot is still empty.Report