Hosts launch legal fund for collective action against Airbnb for unilateral refunds and inciting travelers to cancel reservations

Airbnb’s home suppliers, or “hosts” using the Airbnb label, are beginning to use legal channels to hold Airbnb accountable for “unilaterally, and in violation of hosts cancellation policies, refunding guests who booked reservations” and for inciting travelers to cancel their reservations.

On March 13, Airbnb announced the company would be overriding its hosts’ cancellation policies by adjusting the terms of its Extenuating Circumstances policy and by issuing full refunds to guests for stays between March 14 and March 31. While the company refunded the cost of the rental, Airbnb did not initially refund its service fee. However, on March 14, after significant push back from its suppliers, Airbnb decided to also refund its service fee. Later, Airbnb extended the dates for refunds through May 31. The series of events led to significant hardship for its home suppliers who were working with guests directly to change stay dates before Airbnb stepped in an overturned their efforts. 

As a result, hosts began discussing whether Airbnb had the legal right to take this action launching forums and groups such as Twitter’s Airbnb Host Class Action. 

This week, Traverse Legal, led by managing partner, litigation attorney and Airbnb host, Enrico Schaefer, is taking things a step further by launching a fundraising campaign to pursue a collective action against the company, saying “collective action by Airbnb hosts is critical to effect change.”

“This fund is about bringing fragmented voices together,” Schaefer wrote. “It is about creating leverage and sending a collective message demanding change. Our attorneys are already working on the right legal strategy for group action. Our attorneys have dug deep into the terms of service, the extenuating circumstances policy, the arbitration mandate, the class action waiver and other contract issues.”

According to Shaefer, “There are hundreds of thousands of Airbnb hosts globally asking Airbnb to uphold their end of the bargain. Airbnb’s lack of transparency and lack of accountability are breaches of their contractual obligations to hosts. Now is a time for collective action.   Hosts are making substantial capital investments directly tied to the Airbnb platform. They require predictability, follow through by Airbnb, transparency and accountability.”

The following text is taken from Traverse Legal’s website:

Airbnb unilaterally, and in violation of hosts cancellation policies, refunded guests who booked reservations between the dates March 14th and May 31st. Our analysis of the contract terms, relevant law and facts has led to the conclusion that Airbnb hosts have a viable breach of contract case against Airbnb:

• Why did Airbnb refund guests? Airbnb recently relied on the “extenuating circumstances clause” of its standard terms / agreement with property owners and guests to justify its first and second round of guest cancellations and refunds due. Airbnb concluded that the Covid-19 / coronavirus was an extenuating circumstance.
• Key Issue: Does a pandemic fall within the language of Airbnb’s extenuating circumstances clause?
• Do hosts have legal claims against Airbnb? As you will read below, our attorneys represent Airbnb hosts and have determined that Airbnb may be in breach of its platform agreement with hosts as a result of providing traveler refunds in response to coronavirus. Stated another way, guests were arguably NOT entitled to refunds under the rental agreement and Airbnb’s standard terms and policies.
• What can hosts do about the forced refund? Airbnb could be liable for money damages to hosts for allowing booking cancellations and providing refunds. The terms of service contain a mandated arbitration clause for all disputes. This arbitration clause may, or may not, be enforceable. A possible class action is being analyzed as the class action waiver clause could also be considered unreasonable under California law or if the class action waiver is determined a violation of public policy.
• What should you do if you are a Airbnb Host who was affected by the cancellation and refund decision? Contact one of our litigation attorneys representing hosts. We are on the front line of the factual and complicated legal analysis for hosts. While this virus has taken the world by surprise, unexpected circumstances are drafted into your hosting agreement with Airbnb. In short, a pandemic is one of the contingencies which was foreseen and the risk that was adjusted under the extenuating circumstances policy. Airbnb should follow those policies and terms. Instead, Airbnb has diverted what appears to be one billion dollars in host revenue by allowing cancellations for traveler reservations between April 1 and May 31. While Airbnb has pledged 250 million to hosts, that leaves hundreds of millions in damages to be pursued by property owners. As any hosts point out, travelers have the option of buying insurance against these types of events. Hosts do not.

Learn more about the legal fund.