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A former Airbnb host is suing the short-term vacation rental company, alleging Airbnb has violated its contract with hosts and is shortchanging them with the cancellation and refund policy it put in place in March in response to the COVID-19 outbreak that shattered the travel industry.
The proposed class action lawsuit filed Thursday in federal court in California accuses the tech company of breach of contract, breach of fiduciary duty and violation of California’s Unfair Competition Law. It is seeking monetary damages.
Plaintiff Anthony Farmer, a Texas resident and longtime Airbnb host whose main source of income came from renting his vacation property through Airbnb, claims he is now unemployed and is out hundreds of dollars due to changes the company made to its cancellation and refund policy in the wake of the pandemic.
When the outbreak emerged in the U.S. in mid-March, Airbnb announced it would offer full refunds to guests who booked rentals on or before March 14, 2020, via the company’s Extenuating Circumstances Policy.
Normally, guests and hosts agree on cancellation terms that allocate the risk between each respective side, according to the complaint. The extenuating circumstances policy spurred by the pandemic served to override the pre-existing policy, and the move equated to Airbnb siding with one group of Airbnb users (guests) and against another group of users (hosts), Farmer alleges.
The result is that the limited refunds that were actually issued to guests came directly out of hosts’ pockets, the complaint claims.
As for hosts who lost income due to cancelled bookings, the company publicly announced it had set aside $250 million to help mitigate the loss to hosts. Hosts would be eligible to receive 25% of what they would’ve received from guests under the cancellation policy in place at the time of the booking.
In Farmer’s case, Airbnb’s 25% pandemic remuneration policy meant he lost out on hundreds of dollars in cancellation fees he would have collected under a stricter 50% cancellation policy he opted for as a host pre-pandemic, according to the complaint. He has allegedly lost at least $655 and his attempts to contact the company to resolve the issues have not been successful, according to the complaint.
Farmer counts himself as one of the “hundreds of thousands of hosts who have been shortchanged by Airbnb,” and is seeking class action status on their behalf in an effort to hold the company accountable.
Furthermore, the complaint alleges the company did not actually issue full refunds to guests as promised, and instead forced them to accept travel credits that expire next year. In some cases it issued partial refunds and in others it failed to issue any refund.
“Airbnb then kept the remaining funds for itself — ignoring its fiduciary and contractual obligations to remit any such money to hosts,” according to the complaint.
At the same time, the publicity generated by Airbnb’s announcements about guest refunds and the $250 million fund set aside for hosts allegedly helped burnish the $25 billion company’s brand as it prepared to make an initial public offering, expected later this year, according to the complaint.
A lawyer representing Farmer told CNBC that “because of the Covid crisis, hosts aren’t getting paid, guests often aren’t getting refunds and Airbnb is just coming out way ahead. Something that the lawsuit will be seeking is an accounting of where the money is.”
A spokesman for Airbnb said the allegations of the lawsuit are without merit, CNBC reported.
Farmer initially attempted to take legal action against Airbnb through arbitration court, as stated in Airbnb’s terms and services for hosts.
To file his case in arbitration, Farmer worked with FairShake, a company that helps consumers file legal claims against companies. FairShake has been working with a number of Airbnb hosts since March to pursue legal action against the company, CNBC reported.
Are you an Airbnb host? Have you seen a drop in income due to the company’s cancellation and refund policy? Tell us about your experience in the comments below.
Farmer and the proposed Class members are represented by Michael L. Schrag, Geoffrey A. Munroe and Joshua J. Bloomfield of Gibbs Law Group LLP; and Enrico Schaefer and Adrianos Facchetti of Traverse Legal PLC.
The Airbnb Host Pandemic Cancellation Policy Lawsuit is Anthony Farmer v. Airbnb Inc., et al., Case No. 3:20-cv-7842, in the U.S. District Court for the Northern District of California.
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2 thoughts onFormer Airbnb Host Sues Company Over COVID-19 Refund Policy
Airbnb has retain payment of 7 rentals in panama for the amount of 1.000 clients have paid but company refuses to pay me back
I reserved a home before March 2020 via Airbnb, and put down my deposit, then the virus hit. I conversed with the property owner through Airbnb messaging system about getting my refund. She told me Airbnb would have to decide. I tried to contact Airbnb, but could not find any contact information on complaints. Unfortunately, I never received a refund.
Airbnb, basically took the money and ran during a crisis.