A class action was just filed by Hosts against Airbnb. What you need to know...

Welcome to today's Airbnb host update. Those of you that know me, and many of you do, know that my name is Enrico Schaefer. I'm a complex litigation attorney specializing in internet and technology law. I've been representing hosts for about 9 months now in AAA arbitration, and Hosts have filed arbitration claims against Airbnb because their host payouts were diverted by Airbnb when COVID hit. Those hosts were already managing the situations with their guests, and really, even though Airbnb said it was refunding the guests, as you'll see in the class action we're going to talk about today, what really happened is that Airbnb couldn't meet his expenses. He couldn't Airbnb couldn't make the host payouts. It couldn't pay for the customer service required in order to meet its obligations. So it simply avoided those host payouts by telling the guests, hey, we're going to give you a full refund because of COVID We're going to do the right thing. Great public relations here from Airbnb. Give it credit where credit is due because they spun this as Airbnb is doing the right thing. But what was really happening is they diverted host payouts, they promised the guests that they were gonna get refunds, and then they bait and switched those refund promises into an Airbnb travel credit. And as you're gonna see as we look at the class action that was filed last night by Travers Legal and co-counsel, the Gibbs Law Firm, what happened is that Airbnb really needed to pay expenses. It couldn't. It diverted those host payouts. It tricked the guests into travel credits, and it kept all the money it held as a fiduciary for the hosts that were paid by the guests to the host, kept all that money, and it did 2 things. It either delayed payment so that it could increase its position in cash flow, or it simply kept the payments for itself. That's money in which it had zero interest in, kept the payments for itself, and then logged that as a future debt if and when a guest ever used the travel credit. So today I'm going to bring you up to speed on what's happening with the class action that has now been filed against Airbnb so that your questions get answered, so that you understand what's happening, so that you can talk to other hosts so they'll understand what's going on. So let's just dig right in. First thing I want to tell you is that, look, at Travis Legal's been at this for 9 months. We've been representing hosts. and the host community. We were the ones that broke the story about Airbnb changing the terms of service on March 11th, changing the terms of service in the ECP to say pandemic, when in fact on the reservations at issue had, had excluded pandemics from a refund ECP policy item. It did That it changed the terms of service, it changed the word endemic to pandemic, and then it tried to hide that to the world and then offer these refunds as though the extenuating circumstances policy had always said pandemic. So fraudulent, deceitful behavior by Airbnb in order to protect itself, right? So we've been doing these host arbitrations, representing hundreds of hosts, filing arbitrations. on the COVID-19 refunds in order to get those payments that Airbnb was supposed to make a long time ago, get those paid out to Airbnb, and also to force Airbnb to change the terms of service so that Airbnb is accountable for the obligations that it took on to hosts and is transparent about why it's doing certain things, the decisions that are being made. So we've been doing this for a long time. Why class action? Why class action now? Well, We've been working towards a class action now for several months. We've been interviewing different law firms in California that specialize in California class actions. We have done many class actions in the past, but we felt it was really important to partner up with another firm so we can bring the resources necessary to adequately protect the interests of hosts in a class action lawsuit against one of the largest companies— internet companies in the world. So, the good news is, as a result of that vetting process, we actually found a firm called the Gibbs Law Firm, and we're really impressed with the Gibbs Law Firm, and they really are in the top echelon of class action law firms in California, but more importantly, of all the different law firms we took a look at, this is the firm that we found to be the most credible, the most client-oriented, the most honorable, because at the end of the day, what we're looking for is change. We know that hosts are demanding changes to the terms of service and changes to the way Airbnb does business. We need a team in place that is going to follow through on this commitment to hosts. So the Gibbs Law Firm is riding shotgun on this. We're co-counsel with Gibbs. We're really happy to have them on board, and we think they're a tremendous asset. So let's take a look at really what, what I want to share with you today, which is to kind of go through a little bit about what's happening and why it's happening, answer some of the questions that we know you have. So first thing, you know, I want to talk about is this team that we've put together. The first thing is this team includes you. We represent some of the top hosts from around the world, some of the top property managers who list their properties on Airbnb. Some of the top companies that are listing properties on Airbnb, some of the top influencers for Airbnb, some of the hosts that have filed arbitration and are participating in this effort are very close with Airbnb. They're Airbnb champions. So the first thing I want to tell you is this is not about, you know, that Airbnb needs to be put out of business or they're an evil corporation, right? They've done some things that perhaps are predictable when a company starts heading for an IPO and it forgets its roots, right? But we want Airbnb to succeed, and we want a win-win situation here for Airbnb. So if you join this class action, you should join it from the spirit that Sometimes companies get off track, and sometimes companies need to be reminded of the essential features of their business model. In the sharing economy, the people who are doing the sharing, the hosts, they're the ones that take the risk. They're the ones that make it work, and we need to, to honor the obligations to the host if you're a platform such as Airbnb. So you, the hosts, are a key part of this team, and you've been that for this effort. since day one. For 9 months you have propelled this forward. So, Travis Legal PLC, that's, that's my law firm. You know us, you know me. We have a great YouTube channel. It's got all kinds of educational materials for hosts about things that— forget COVID— things that you need to know as a host about your legal rights. It's free legal advice, free legal information on the internet through YouTube. Gibbs Law Group, we already talked about them. A Huge asset to this effort, and, and, and really between the, the, the Travers Legal Team, the Gibbs Law Group team, we are going to be representing you. We are in this for the right reasons, and we are going to see this through to the end. So that is the team that is involved in this class action. Let's talk a little bit about why are Airbnb hosts suing, right? What's the issue here? So Airbnb diverted payouts belonging to hosts for their own purposes, and they breached their fiduciary duties. They breached the terms of service. They breached their own obligations under the ECP. Airbnb lied to both hosts and guests about the refunds, the COVID-19 refunds, and they did so because not of any public interest or Safety. They did so to save themselves. That was inappropriate. The money did not belong to Airbnb. It belonged to the host. It was paid by the guests. The contract is between only the host and the guest, and Airbnb needs to stay out of that. So the top hosts in the industry who are part of this effort, they want fairness and accountability. That is not too much to ask. They're champions of Airbnb on one hand, but they're gonna hold Airbnb accountable on the other. Things are great when they are great for hosts, but your risk is substantial. You've got properties, investments, you've got employees, you've got maintenance people, you've got cleaning people, you've got all of the folks that you're doing this for— your kids' college education, your mortgage, your retirement. If you are going to risk all of that, you need some certainty, and that is going to come through the terms of service. And that means Airbnb's got to make good on its obligations under the terms of service. So there's all sorts of Great obligations that Airbnb takes on in its terms, but then it's got this thing like Section 16 in the new terms that'll be coming into effect in January, which are a little bit different but the same as the old terms. Because basically what it says is, yes, we've, we've, we've made all these obligations and commitments to you and we owe you all these duties, but we don't have to make good on any of those duties. There's a little clause that says, but if we don't want to, we don't have to. But if we don't want to, we don't have to, and we don't have to tell you why. That is an illegal contract. It's an illusory contract, a promise of nothing. That term's got to go away. The other thing is that Airbnb, even though it's acting as a collection agent for the host with the payments made by the guests, as an agent, a fiduciary to the host, right? It says, but if there's a refund request under the extenuating circumstances policy, We get to be the judge, the jury, and the executioner. We get to decide everything about that refund, and we can do whatever we want with that money, including give it to ourselves, and we don't even have to tell you why. So no accountability, no transparency, and they've got a horse in the race. They acted in their own self-interest to save themselves when COVID hit, and they used the host money and the guest money, the guest payments and the host payouts in order to do that. You're not allowed to do that if you're holding money as an escrow, as a fiduciary. So if there's going to be some sort of ECP, which provides some sort of extreme circumstance refund, it can't be Airbnb, the fiduciary, who decides that. It has to be a third party. So that's why hosts are bringing this class action. That's why they've been filing arbitrations. That's why we encourage you to do so. All right, so let's take a look at some of the basics here. What is a class action? So, class action is a type of a lawsuit where one of the parties is, is a group of people who are going to represent all other members of the group. So, we have hosts who are representing all the hosts in the US in this class action, and we're working on an approach which will allow us to actually potentially bring in all the hosts outside the US as part of the class action. We are certainly looking for a result if this matter ever does get resolved, which if Airbnb is smart, they would resolve it and move forward. But we're going to do that if we can on behalf of all hosts. So if you're outside the US, this fight is still worth fighting for you. We're still fighting for you. So let's just take a look at, at what's being alleged here. in the class complaint that was filed last night, which was what, November 5th? So what you need to know about the class action is it's a filing in federal court in San Francisco in the Northern District of California. The representative plaintiff currently is Anthony Farmer. We'll be adding more representative plaintiffs as we go. The defendants are Airbnb Inc. and Airbnb Payments Inc. Payments Inc. is the The collection agent for hosts. When the, when the money gets paid by the guest, Airbnb Payments Inc. holds that money as a payment processor whose sole role is to pay it out to hosts. They act as the host agent. The, the real gamesmanship in all of this by Airbnb's attorneys is that they crafted it so that even though the entity, Payments Entity, has an obligation to just pay that out to the host, Under the terms Airbnb's lawyers have drafted it so that Airbnb actually gets to decide everything that happens with that money, even though they're acting as a fiduciary to that money, an escrow to that money. They somehow get full say over what happens with that money, and we think that's inappropriate. So look at high level, Airbnb's planning an IPO. They were planning one that was supposed to go in May. COVID hit. They needed $2 billion to stay afloat. Probably more than that, which is why they, they engaged in the activity that they did. Airbnb apologized for its COVID refund fiasco and the diversion of funds from hosts, but it didn't stop it from continuing to engage in the activity. So Airbnb didn't actually issue the refunds to guests as it said it would. Instead, it rejected many of the refund requests. Forced others to accept travel credits that expire in a year and a half. And if they expire, then Airbnb, who has no interest in this money at all, all of a sudden gets that money for itself— complete control and ownership of that money. And in the meantime, we think what's happening is that the money gets released from Airbnb Payments to Airbnb Inc., who can now use your money as part of its general operating expenses. So discovery will reveal What happened to the money? Airbnb then kept the funds for itself and ignored its fiduciary duties and its contractual obligations, and it acted with rampant self-dealing despite its fiduciary obligations to both guests and hosts. So that's what's going on here in this lawsuit. You can read through the complaint, it's on our website, and, and I'm sure it'll be out there. So take a look at it, understand what's going on. I know that people love— there's a lot of hosts who love Airbnb, but that doesn't mean that you should be taking on this unreasonable level of risk and accepting unconscionable terms of service. Because it's all great until it's not, right? It's all great until all of a sudden you're looking at being unable to pay your mortgage because Airbnb Did something and isn't accountable or transparent with your money. So if you happen to do okay during this whole COVID, if you had a flexible cancellation policy anyway, right, that doesn't mean there's not a reason for you to be fighting. There is a reason for you to be fighting. All right, let's go back and take a look at some other things that I wanted to share with you about this class action. So one of the questions we've already started hearing is, what about the arbitrations? We're filing scores and scores of arbitrations on these same COVID-19 refunds for hosts. Airbnb is going to fight this class action. You have a right to file these arbitrations under the terms of service. All the arbitrations that are currently filed are going to keep moving forward. You should be filing an arbitration as well in order to exercise your rights. And help bring Airbnb to the table to start to deal with the issues that they've created. So arbitrations continue forward, full speed ahead. You can contact us. We'll handle your arbitration or get you into a system that'll allow you to engage in self-help to file your own arbitration. And we'll also bring you up to speed on the class action and get you involved in that so that you have the choice. of potentially participating in the class action settlement or proceeding forward in arbitration on the damage claim. Okay, here's the deal. Why should I, why should I join this effort? Why should I be part of this effort? I feel like I'm doing good, or things are back on track, or I've got better things to do, right? You should join other top hosts who are participating in this effort. Because Airbnb is holding your money as a fiduciary. Airbnb has used your money to save themselves, and if they did it once, they'll do it again, right? If something else happens down the line— and keep in mind, this is not just about COVID-19 refunds. We've heard this for years where the guest tells the host, hey, my conference was canceled, I can't come. So they've already admitted that there is no extenuating circumstance, and then they go to Airbnb customer service and then they say, oh, someone in our party got sick because All of a sudden they realize they've got this free pass for a refund if they say the magic words. And oh, do they even provide any proof? Probably not. But under the terms, Airbnb doesn't have to tell the host why the cancellation occurred, what documentation was provided, or anything that would indicate why the decision was made. That's crazy. That's— who would agree to that? That's insane. It's unconscionable, right? The arbitrary What if a judge or an arbitrator was able to decide whatever they want, whenever they want? There was no rules by which they had to abide. There was no one that could review them. They had a self-interest, a horse in the race that they could financially benefit by the result, and they got to decide exclusively without telling you why, what that result was gonna be. It's crazy talk, and that's yet what Airbnb is saying in these arbitrations and in court. So, look it, Airbnb was able to avoid or delay its payment obligations to hosts to improve its IPO and its cash flow. This money didn't belong to hosts. This is wrong. If Airbnb did it once, they'll do it again because guess what? They feel impervious because they've got this amazing public relations team that can spin anything to make Airbnb look like the good guy. All right. So Airbnb didn't even follow its own terms of service or its own ECP policy. And if, again, if they're gonna just simply do whatever they want whenever they want, that doesn't work for hosts. You've got too much at stake. So how do you get more information about the class action? Let me show you. So we've got a website that's got tremendous information. That is available to hosts, and traverselegal.com is the website. And on this, there's a resource page, there's information about the class action, there's all kinds of information. But just get in the information flow. There's no obligation here. It says contact a class action lawyer. You can, but you don't have to sign up. You'll have all your options. Just fill out this form. That'll put you into our system. You'll get updates. You'll know what's going on. We'll tell you what your options are. And look, if you want to file for arbitration, which we hope you do, we'll get you set up there. If you want to hire us to represent you in the class action, we'll do that as well. But all choices, as always, will be yours. So my name is Enrico Schaefer. That's all I have for today. Stay tuned. There's lots of information. Feel free to send Send me questions through this form if you have any. I'll schedule a call. I'll get all your questions answered. We are here for you, the host community. Until next time, signing off, Enrico Schaefer.