Airbnb allowed rampant price gouging following L.A. fires, city attorney lawsuit alleges
In a statement, L.A. City Atty. Hydee Feldstein Soto's office accused Airbnb of allowing illegal rental price hikes and permitting false and nonexistent hosts and addresses on the platform. The lawsuit seeks a permanent order to halt Airbnb from hiking up prices during the existing state of emergency, as well as reimbursement for consumers who were charged higher rates.
"Although Airbnb subsequently took steps to curtail price gouging, evidence indicates that illegal gouging on the site continues and may be ongoing,' Feldstein Soto said in a statement announcing the civil enforcement action. 'Airbnb is aware that its verification processes are inadequate … potentially luring prospective tenants into a false sense of security about its hosts and locations.'
Airbnb disputed the lawsuit's accusations, saying the platform has played a consistent role in supporting victims with financial aid following the wildfires.
Read more: Scams, bidding wars and predatory landlords: One couple's quest for housing after the fires
'Since the wildfires broke out, Airbnb … contributed nearly $30 million to fire recovery efforts in Los Angeles, including free emergency housing to nearly 24,000 people impacted by the fires,' an Airbnb spokesperson told The Times. 'We will continue supporting the city of Los Angeles in its recovery and rebuilding efforts.'
The lawsuit seeks fines of $2,500 for each instance of alleged price gouging in L.A., which could reach between 2,000 and 3,000 properties, or up to $7.5 million in total penalties.
The lawsuit also alleges that Airbnb's 'inadequate' verification processes left users vulnerable to offenses such as identity theft, robbery, sexual assault, invasion of privacy and voyeurism. Airbnb did not respond to an inquiry from The Times regarding those claims.
The unverified and 'nonexistent' hosts alleged in the lawsuit refer to cases of hosts using fake names to represent themselves on the platform.
According to the lawsuit, cases include a profile under the name of 'Amber Hiller' that actually belonged to a woman named Akila Nourollah, and a host named 'Greg,' verified using the ID of someone named Guven Sacikarali, a relative of the actual account controller, Ali Sacikaral.
Read more: While many were helped, some fire victims say Airbnb's free vouchers are useless
While not the correct name of the account owners, Airbnb does allow the use of 'preferred names' in its terms and conditions.
The lawsuit also mentions several cases in which verified locations on Airbnb were actually located up to four miles away from the advertised address.
If price gouging claims are determined to be true, the lawsuit claims that Airbnb can be found to have violated the state's Unfair Competition Law, California Penal Code Section 396, the Anti-Gouging Law, and the Jan. 16 state of emergency declaration by Gov. Gavin Newsom, which states that it would be illegal for Airbnb to increase the pricing of rentals by more than 10% during the state of emergency.
The firestorm that erupted on Jan. 7 ultimately destroyed more than 16,000 buildings in Pacific Palisades, Malibu and Altadena.
Read more: After disasters, FEMA leases apartments for survivors. But not after the L.A. fires
In January, Airbnb released a statement denouncing price gouging and promising to make it impossible for hosts to raise the prices of their properties by more than 10% from their pre-wildfire rates.
'With tens of thousands of people currently displaced in the Los Angeles area and the prospect of that figure continuing to increase, the last thing anyone should encounter is pricing for a hotel room or a home that seeks to take advantage of a desperate situation,' the statement read.
The company also pledged to give free $1,000 vouchers to fire victims for Airbnb stays. By Jan. 28, more than 11,000 vouchers had been sent out. However, some fire victims claimed that strict regulations and a lack of response to applications made the vouchers essentially useless.
While the state of emergency declaration aimed to prevent rental price hikes during and following the fires, previous Times reporting revealed that prices had continued to balloon in parts of L.A., leaving those without shelter with little options besides expensive stays.
Read more: 'Everyone else has moved on': Why L.A. fire victims may be feeling even worse now
An Airbnb spokesperson said the cap on increasing rental prices following the fires stayed firm, allowing for no illegal increases.
The company cited California Atty. Gen. Rob Bonta's early statements, which praised Airbnb's promises to comply with the state's emergency declarations.
"They're doing the right thing, I thank them for doing that. We hope other platforms will follow suit and do the same,' Bonta said during a Jan. 16 news conference.
However, Bonta's statements came before many long-term Airbnb rates were set.
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This story originally appeared in Los Angeles Times.
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