Decided - The FindLaw Noteworthy Decisions and Settlements Blog

Airbnb Settles Short-Term Rental Dispute in San Francisco

Nearly a year ago, Airbnb filed a lawsuit against the city of San Francisco, challenging a law the city passed attempting to regulate their disruption of the hotel industry. The legislation not only required Airbnb host-users to register with the city and adhere to strict limits, the city made it illegal for the company to collect fees from the host-users that were not registered with the city as short-term rental providers.

Airbnb challenged the law on the basis that it violated a federal act protecting the online publishers of information from liability. Unfortunately for Airbnb, a federal judge found their argument unconvincing. The court explained that the San Francisco law did not penalize anything involved with the publishing of information, but rather, penalized the separate conduct of collecting fees from hosts that do not register with the city.

In the wake of that decision, Airbnb and the city reached a settlement after much negotiation and problem solving. The settlement will allow business to continue for Airbnb while also accomplishing the goals the city's legislation sought to achieve.

Details of the Settlement

Under the settlement, which is anticipated to gain the approval of city supervisors, Airbnb has agreed to implement a system that would involve the city of San Francisco in their sign up process for hosts within the city. Additionally, the company agreed to deactivate listings identified by the city as having failed to register.

Essentially, in the new system, which should be up in less than a year, hosts would be required to enter unique host registration numbers into Airbnb's system to complete the sign up process. For their part, San Francisco will have the burden of providing hosts with those registration numbers after they have properly registered with the city as a short-term rental host. This will allow for easier monitoring as it will attach a city registration number to an online host's property

From Sharing to Caring

While the concept of a "sharing economy" was still a fresh, innovative idea that the public didn't recognize as a clever way to avoid government regulation, along with Uber and Lyft, Airbnb was able to emerge as a major player in the hospitality industry.

However, just like Uber and Lyft, when the veil dropped and the public, governments, and other businesses, realized that a major corporation was built by basically just skirting the law and regulations, not only did new legislation get passed, but lawsuits got filed. Since then, and because these companies were able to gain significant market share during their honeymoon disruption phases, many have pushed away from the sharing economy ideal, towards a more "self-reliance" philosophy to justify the continued mischaracterization and exploitation of their workforces.

Related Resources: