If you've hosted for AirBnB, you know how tenuous the process can be. You need to keep track of who is coming and going, screen potential guests, prepare housing for them, ensure payment comes in, and yet still give a large chunk of change to AirBnB in the end because they are considered to be the "primary merchant".

Once COVID-19 struck, AirBnB announced a sweeping refunds policy for guests with bookings. Essentially, guests could simply get refunds for non-refundable trips by citing the public health emergency. Though this action could very well have prevented the pandemic from affecting more people, it also interestingly led to what some have said is a huge cash influx for the company itself.

AirBnB had been preparing for an Initial Public Offering (IPO), which means that they were getting ready to offer stock in their company for sale to the public. Having higher revenue levels each quarter leading up to this is key for it to go well. A bad IPO can lead to a dead company. Some hosts are alleging that AirBnB allowed consumers to cancel stays, promised the consumers refunds, then took the money back from the host and never paid the consumer.
 

The Specifics

Filed in the United States District Court of Northern California, the class-action suit initially was just one host who claimed a total of $655 in losses. He claims that AirBnB allowed guests to cancel, he was never reimbursed, and that AirBnB could be guilty of breach of fiduciary duty, breach of contract, and a state-specific allegation that California's consumer protection laws were violated. Other hosts were soon to join in, alleging that they experienced similar issues.

 

The Odds of Winning

Interestingly, whenever a host signs up or a guest requests a stay through AirBnB, they agree to settle these types of matters through a third-party arbitrator. While, in practice, consumers often use credit card "charge backs" for stays that weren't as promised, hosts quite often utilize the company called "FairShake" to settle their affairs.

FairShake initially was ruling in hosts' and guests' favor for quite some time since March against AirBnB. However, the CEO of the company noted that these rulings were not being honored, even though AirBnB promised to honor them. This led FairShake to put together its own lawsuit, propelling the first plaintiff's claim into a class action suit.

Of course, it doesn't bode well for AirBnB that its own third-party arbitrator has assisted in successfully getting a judge to agree a case against the company has enough legal muster to continue in civil court. This means that the odds are fairly high that the group of hosts that you could still join will ultimately prevail, though the timeline is not yet clear.

 

How Did It Go from Arbitration to Class-Action?

The initial plaintiff followed AirBnB's terms, going through the arbitration process as described. However, he did not receive payment for at least thirty days. This is where he invoked the California consumer protection law that states that if a company attempts to "stall" a consumer who wins in arbitration by not paying out the full amount within thirty days, that consumer is legally entitled to go in front of a court of law to argue their case for why the company should be immediately compelled to pay out.

 

Why Time Is of the Essence

Again, AirBnB is filing for an IPO very soon. Hosts are alleging through the lawsuit that the company is trying to hide its COVID-related losses and attempted to be two-faced in its approach. On one hand, it told guests they would get a full refund to stop the COVID-19 pandemic from spreading. On the other hand, hosts claim they were left with no income as they were promised.

This lawsuit will likely demonstrate the actual amount of cash AirBnB has before their IPO. If the plaintiffs prevail, it could be revealed that they have less money than they have told the SEC they have. This makes a fast settlement all the more likely.

 

How Do I Join?

If you're a host who had a cancellation, and you never received compensation, the law group representing the group of plaintiffs is currently recruiting plaintiffs just like you! You'll have to fill out the short form right here to be added to the group.