The exposure of an elaborate scheme that allegedly used Airbnb to rent apartments to tourists and travellers – making millions of dollars by getting around state and local laws while flouting Airbnb’s own rules – has drawn hotelier fury.
A lawsuit brought by New York City charges that a ring created more than 100 Airbnb host accounts and 18 corporations to run an illegal hotel business that stretched throughout Manhattan and beyond.
The suit alleges the plotters used numerous misleading identities to get around Airbnb’s rules, texting tourists and booking apartments. It claims addresses were fudged to avoid scrutiny and squads of cleaners were apparently recruited through Facebook.
The aim of the scheme, allegedly, was to avoid lodging taxes and official oversight – and, obviously, to make money. New York City officials told the New York Times the enterprise made more than USD 20 million (AUD 28 million) in revenue by unlawfully renting 130 Manhattan apartments to almost 76,000 guests through Airbnb.
William “Chip” Rogers, president and chief executive of the American Hotel and Lodging Association (AHLA) claims that such activities stretch well beyond New York.
“While the magnitude of this illegal scheme involving Airbnb is shocking, the fact is similar bad actors have been caught running the same ploy in other major cities across the country,” Rogers said.
In an issued statement, Rogers continued: “Airbnb’s CEO has committed to a one host, one home policy, ‘true home sharing’, yet the company fights city leaders who try and implement this very policy. The company’s leaders claim they want to pay taxes, but only if it’s under their secret, voluntary and non-auditable tax agreement. Airbnb alleges the company is in favour of registration and compliance for their hosts, yet the company sues city governments to withhold vital information from city officials trying to protect housing.
“Enough is enough. It is time for state and local leaders to pass stronger short-term rental laws and enforcement because Airbnb has shown it is incapable of preventing illegal and fraudulent activity on its platform.”
New York regulations are designed to keep apartments from being withdrawn from the city’s notoriously tight rental market and diverted to supply the tourist trade. It is illegal to rent an entire apartment in most buildings for fewer than 30 days – unless the permanent tenant is present throughout.
In its lawsuit, the city is seeking more than USD 20 million from five defendants, who include at least one former real estate salesman. The matter is a civil case rather than a criminal one. There has not been a verdict and the case continues.
The New York Times quoted a lawyer representing some of the defendants calling the lawsuit “a political move by the mayor”.
Airbnb says most of its hosts are everyday New Yorkers who rent out a spare bedroom or list their apartment while on holiday. The city estimates about one-third of listings on home-sharing websites generally are run by commercial operators. Airbnb disputes that estimate. Airbnb’s “One Host, One Home” policy usually lets New Yorkers list just one apartment.
Written by Peter Needham
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