How Congress' Attempt To Break CDA230 Could Kill Airbnb

from the liability-liability-liability dept

Earlier this week, we wrote about a dangerous bill to punch a giant hole in Section 230 of the CDA. We spent a lot of time in that post detailing how problematic the bill is and how it would actually be counterproductive to the stated goal of stopping human trafficking. But, beyond just being counterproductive to the stated goal, the bill would likely create fairly massive negative consequences for tons of internet companies. If anyone used any part of that company's products and services for trafficking, it would open up companies not just to liability, but to costly legal action, even if they're eventually vindicated.

And I wanted to dig into one example: Airbnb. As we've discussed in the past, Airbnb relies heavily on CDA 230, because otherwise, any time anything went wrong with an Airbnb hosted place, Airbnb would face potentially crippling lawsuits. And I'm thinking about Airbnb specifically, because of a recent ruling that Eric Goldman pointed out, in which Airbnb's largest competitor VRBO was saved by CDA 230. You can go over to Eric's blog to read the details, but the really short version is that someone booked a "luxury resort" via VRBO for a ridiculous sum of money, and the rental units never happened. The victims targeted VRBO with the lawsuit, but the court has none of it.

The plaintiffs claimed VRBO qualified as a “seller of travel services,” which would subject it to heightened regulation. The court disagrees: “HomeAway merely provides a venue for others to sell or provide lodging, but does not provide the actual facility where people can ‘lodge.'” See the uncited SF Housing Rights Committee v. Homeaway ruling. Further, if VRBO did constitute a seller of travel services, Section 230 would apply: “To hold HomeAway liable for misleading or inaccurate material (e.g., images from another property listing appearing on a different HomeAway website being duplicated on the VBRO.com Jewels of Belize rental account) in the third party created Jewels of Belize listing contravenes Section 230 of the CDA.”

To get around Section 230, the plaintiffs invoked VRBO’s “Basic Rental Guarantee,” which provides reimbursement for certain types of fraud (but doesn’t cover direct wire transfers like those at issue here). VRBO denied the reimbursement claim, concluding that the listing came from an authorized property owner and the property actually existed (but apparently had serious problems). The court says VRBO did what it promised to do in the “guarantee.” The fact VRBO used the term “guarantee” (a term I wouldn’t have chosen personally) didn’t convert the reimbursement promise into something more.

Now, there's a somewhat reasonable argument to be made that it would be smart business strategy for VRBO to handle the situation better and to reimburse these people. But making the company legally liable is another story.

So, now let's get back to SESTA, the bill that was released earlier this week. Surely, some of you are thinking, that's not a big deal for Airbnb? After all, everyone's just talking about how it's designed to takedown Backpage (ignoring that Backpage already shut down its adult section, and current law already lets the DOJ go after Backpage if it violated federal trafficking laws). And Airbnb isn't Backpage. But... there actually have been a whole bunch of stories this year claiming that prostitutes are now using Airbnb. And, with some folks trying to conflate prostitution with trafficking, is it any stretch of the imagination to think lawyers will start suing Airbnb, claiming it's violating federal anti-trafficking laws?

As Eric Goldman asks in his post:

In light of that, how would Airbnb and VRBO change their behavior to reduce their potential liability for sex trafficking pursuant to the proposed bills? Heck if I know, and I doubt Congress knows either.

Put yourself in the shoes of Airbnb and tell me: how would you completely rule out that anyone could possibly abuse the Airbnb service for trafficking? It's... not easy. This doesn't mean Airbnb wants this activity to happen via it's platform. I'm 100% sure that it does not. It would be thrilled if there were an easy to way to stop it. But... it's not. Like, this is a basic impossibility. And yet, if it happens, then suddenly the companies themselves could be liable for criminal activity. Criminal activity that was done by others, that Airbnb would have no effective way to stop, short of shutting down the site or doing something ridiculous and drastic. That... seems like a pretty big overreaction. Yes, trafficking is a problem, but this bill is sending a wrecking ball through the internet as it seeks out one particular company.

And, yes, I get that some people don't like Airbnb, so maybe they're fine with this kind of collateral damage, but Airbnb is just one example here. Plenty of other sites that you probably do like will face similar problems. This is a bad bill that won't even help with its stated goals, but will create serious problems for people around the globe.

Filed Under: cda 230, intermediary liability, liability, prostitution, section 230, trafficking, unintended consequences
Companies: airbnb, vrbo

Airbnb Competitor Sues San Francisco For Making New 'Legalize Airbnb' Law Too Restricted To Airbnb

from the interesting-legal-theories dept

We've reported a bunch of times on the various legal fights that Airbnb has had to go through lately. Just a few weeks ago, NY's Attorney General Eric Schneiderman (who has admitted in the past that his interest in Airbnb is really about protecting NYC's big hotels), said that he believed most Airbnb listings in NY to be illegal. Under his standards, every Airbnb I've stayed at in NYC would almost certainly be illegal, despite the fact that I have had nothing but fantastic experiences with Airbnb in NYC (much better than my experiences with hotels). San Francisco seemed to be going in a different direction, however, with the city passing a new law just last week that effectively legalized many Airbnb rentals. This law was actually fought by so-called "housing interests" in San Francisco (who seem to have some trouble understanding basic economics).

So you might assume that any legal challenge to the law would come from those "housing interests." Instead, however, it's Airbnb's biggest competitor, HomeAway, perhaps best known for its VRBO site (unofficial motto: "we were Airbnb before Airbnb, dammit"). HomeAway is arguing that the various restrictions that San Francisco put in this new law to appease those "housing interests" are actually unconstitutional in that it unfairly enables Airbnb's particular business model, while limiting HomeAway's. The key issue: many of the people who use HomeAway use it to rent out second homes, while the new law targets short-term rentals of primary residences only.

How could that possibly be illegal? Well, that's where you have to dive into the convoluted legal argument of HomeAway, which argues that this new law violates the Commerce Clause of the Constitution by "discriminating against interstate commerce" because there's "differential treatment" between SF-based residents and non-California residents.

The Ordinance violates the Commerce Clause because it discriminates against interstate commerce through differential treatment of San Francisco-based and non-San Francisco-based interests that benefits the former and burdens the latter. This unconstitutional discrimination takes two forms. First, by its express terms, the Ordinance allows only permanent San Francisco residents to rent out on a short-term basis (which the Ordinance defines as thirty days or less) residential property they own or lease in San Francisco. Non-permanent residents of San Francisco who own or lease property in San Francisco are barred on the face of the Ordinance from renting out their property on a short-term basis. Second, the Ordinance requires entities that provide “Hosting Platforms,” on which owners and lessees of property may advertise their property for short-term rentals, to conform their business operations in San Francisco to one particular model, and no other, under pain of monetary penalties. This anti-competitive measure forces those seeking to rent property to turn over control of selecting short-term tenants to entities that operate the type of Hosting Platform model sanctioned by the Ordinance and to pay whatever fees those entities might charge today or in the future. While facially neutral, the Ordinance’s Hosting Platform rules have the purpose and effect of discriminating against non-San Francisco-based interests.

This seems like a massive longshot.

Admittedly, many of the restrictions in the law do seem silly and pointless. It seems reasonable to let people rent out their homes for short-term rentals whether or not it's their primary residence. But to sue the city of the law? And, it seems worth noting that it's not clear that anyone was seriously enforcing the existing law (which is why Airbnb has been so successful), and even with this law in place, it's not clear that anyone would be enforcing it against VRBO owners. Still, it's interesting to see the kinds of legal fights these new kinds of services are facing from all angles these days. It's hard to innovate without a legal team, apparently.

Filed Under: commerce clause, interstate commerce, san francisco, sharing economy, short term rentals
Companies: airbnb, homeaway, vrbo