Los Angeles sued Airbnb, accusing the home rental company of allowing price gouging affecting at least 2,000 properties during January’s wildfires in Southern California, City Attorney Hydee Feldstein Soto said on Friday.
According to a complaint filed in Los Angeles Superior Court, rental prices rose more than 10% for “at least two thousand—and possibly more than three thousand” Airbnb properties in the city between January 7 and 17.
Los Angeles said the increases occurred before Airbnb disabled its “smart pricing” tool, which lets owners have rental prices adjust automatically based on demand, for Los Angeles and Ventura counties.
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Airbnb was accused of violating a California law that prohibits prices of essential goods and services from rising more than 10% following a state of emergency.
Governor Gavin Newsom declared a state of emergency in Los Angeles on January 7, triggering the state’s anti-gouging law, and it has been extended several times.
Feldstein Soto said that while Airbnb, with an estimated 80% market share in the city, has taken steps to curtail price gouging, evidence indicates it may be continuing.
She separately accused the San Francisco-based company of misrepresenting to prospective renters that it has “verified” hosts and property locations on its website, some of which don’t exist.
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In a statement, Airbnb said the company, Chief Executive Brian Chesky, and its affiliated nonprofit Airbnb.org have contributed nearly $30 million to fire recovery efforts, including free emergency housing to nearly 24,000 people.
It also said Airbnb hosts receive error messages if they try to boost prices more than 10% from pre-emergency rates.
The lawsuit accuses Airbnb of violating California’s unfair competition law.
It seeks an injunction to stop illegal rents during the state of emergency, plus civil fines of up to $2,500 per violation.
The Southern California wildfires killed at least 30 people and destroyed or damaged more than 16,000 structures.
Much of the damage came from the Palisades Fire in Pacific Palisades and the Eaton Fire in Altadena. The fires charred an area larger than Paris.
(Reporting by Stempel in New York; editing by Diane Craft)
Topics Lawsuits Catastrophe Natural Disasters Wildfire Sharing Economy