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How to Arbitrate Covid-19 Cancellation and Refund Claims Against Airbnb

Enrico Schaefer - April 22, 2020 - Airbnb Refund Claims

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No, a class action against Airbnb by hosts is not currenlty an option. But there are other ways for hosts to assert legal claims against Airbnb. Filing individual arbitrations is the path to collective action by hosts. Our legal team is filing arbitrations on behalf of hosts against Airbnb, in cost effective ways. Our lawyers are also educating hosts so they can file arbitrations themselves. Watch this vide to learn about your legal rights to arbitrate and theories of recovery against Airbnb.

File Arbitration Against Airbnb Under The Consumer Arbitration Rules

Airbnb’s Terms of Service require hosts to file arbitration (or potentially small claims court actions) for any issues related to coronavirus / Covid-19 refunds and cancellations which Airbnb has allowed under its extenuating circumstances policy. In this vide, we review the basics of the claims against Airbnb and the arbitration process facing hosts.

We are posting videos to educate Airbnb Hosts about their rights. Subscribe to the Airbnb Host Legal Channel Here.

How to Arbitrate your Covid-19 Cancellation Claims Against Airbnb

My name is Enrico Schaefer. I’m the attorney that is handling Airbnb host claims for breaching the terms fo service, failing to follow the extenuating circumstances policy (ECP) and Airbnb’s decision to secretly changing the ECP after COVID-19 became a crisis.

How Did Airbnb Hosts End Up Here?

So let me just give you some background information, so you understand how we got to this point. Many of you came in as a result of reading this blog post that we did on April 15th, “Did Airbnb breach its terms by refunding guests under its extenuating circumstances policy?” And the analysis we did — and we were the first ones to do this analysis and see this issue — essentially established that there was a change in policy by Airbnb over cancellations without 30 days’ notice as required under the terms of service that changed the policy of extenuating circumstances from an endemic to an epidemic. So when your guests booked, the policy said that an endemic could be a reason for a refund but specifically did not include pandemic or epidemic. And we will establish that that was intentional by Airbnb.

Airbnb Breached its Own Terms of Service

There were a variety of different breaches by Airbnb as a result of what happened with COVID. And hosts want to know what their legal rights are in terms of getting compensation beyond the 25 percent that Airbnb has offered. So take a look at this article. You’ll see why we believe there’s a breach, why we believe that it was inappropriate, that Airbnb, if they wanted to do the refunds, they needed to pick up the full tab of those refunds under the host strict cancellation policy.

Let’s take a look a little bit deeper into some of these issues. You may have an arbitration claim — a valid arbitration claim against Airbnb. The terms of service require you to bring your claim in arbitration.

Do I Have A Claims Against Airbnb?

First question is, do you have a claim? Our answer is, yes. On the 75 percent that is not reimbursed for strict cancellation policies, which is about $250 million worth of losses to hosts, that there is a valid claim under the terms of service and extenuating circumstances policy. Does this mean you’re going to win automatically? No. But you have a legitimate claim and a legitimate vehicle to make that claim to an arbitrator. Airbnb’s 25 percent support payment — those supposedly are happening right now as I do this video. But that’s only 12.5 percent of the loss for hosts with a strict cancellation. And of course, we’ve been contacted by hosts who have non-COVID-related claims. And one thing that is very clear is that hosts have felt grieved by Airbnb for a long time as a result of the way that Airbnb handles extenuating circumstances claim, its lack of transparency in terms of how or why it decides to allow a particular circumstance to result in a refund and a variety of other issues.

The Airbnb Terms of Service

So when you sign up for Airbnb, there were terms of service. And those terms of service may or may not be enforceable depending on what an arbitrator concludes. But let me just give you a rundown of some of the general issues that you’re going to be looking at in arbitration. And again, this isn’t legal advice. You haven’t retained us at this point. We’re not saying that you are going to win or lose. And we’re not doing a deep dive into the analysis. This is very superficial for your information to decide whether or not to retain counsel. So the terms of service under section 19 is very long. I’m going to go through it in more detail in an upcoming video with folks who made contributions to the crowdfunding. But in general, you have to understand — so this is section 19 under the terms of service. And it breaks down any number of arbitration issues. So let’s take a look at some of the ones that we’re getting a lot of questions on.

We are posting videos to educate Airbnb Hosts about their rights. Subscribe to the Airbnb Host Legal Channel Here.

Tell Me About My Arbitration Rights

Cost of arbitration — so what is it that you’re going to have to pay in order to arbitrate? The terms of service indicate an initial filing fee capped at $200 and that Airbnb has to pick up the rest of the tab for arbitration. So one of the things that we believe is that, if we can get enough hosts to act in arbitration, it may make more economic sense for Airbnb to simply pay the additional loss to cover all the arbitration costs of hosts beyond your $200. And believe me, arbitration is going to cost significantly more than $200. Someone has to pay the hourly rate of the arbitrator in the case. All right. You and Airbnb agree that Airbnb will be responsible for the payment of the balance of initial filing fees capped at $200 if your claim is $75,000 or less. And you may be entitled to an award of your attorney’s fees and expenses if you prevail in arbitration. The reverse is not necessarily true. This is a typ — the way it’s drafted — a one-way provision where you have an avenue to get your attorney’s fees. It’s not impossible that there could be a claim against you, but it’s very unlikely. And it’s not provided for in the terms of service.

Follow the Required Arbitration Process

So let’s take a look at the arbitration agreement and some of the different things that you’re going to have to understand. So one is — and this is why we’re handling this for hosts because this can be complicated. There’s a process. If you don’t follow process, it could get thrown out. You could waste your filing fee. But you have to go through an informal negotiation with Airbnb’s customer service first. Have you? I don’t know. Have you complained? Does that complaint indicate an informal negotiation with Airbnb? These are issues that we’re handling for hosts. So you can’t go to arbitration until you go through that process.

The Consumer Arbitration Rules Apply

Second thing is that you’re going to go through a very special form of arbitration that is consumer arbitration rules. And the consumer arbitration rules are a special set of rules that are going to apply to — under the terms — everyone’s arbitration no matter where you’re located in the world. All right. Now, here’s where we get into the secret sauce. And this is why Traverse Legal is in a unique position to handle these cases. We’ve done the deep dive. This is our area of expertise. We handle these types of suits against big platform providers on a class-action basis, on an individual basis. We have a tremendous amount of experience in arbitration. We know how to navigate these issues.

The Arbitrator Has Broad Authority

The arbitrator can grant any remedy that parties could have received in court. This becomes really important language. You and Airbnb mutually agree that any dispute claim arising out of these terms or claim of breach, termination, validity, enforcement or interpretation all go to the arbitrator. Now, for those of you who are not yet our clients or are not our clients, I’m not going to go any deeper into our analysis than that except to say that we’re probably the only law firm in the world that really understands how to get through this process in a very strategic way. We’re ahead of the game. And I’ve not seen any other content, any other attorneys out there who’ve figured out how to navigate the system on an individual and collective basis in a way that’s going to give you your best advantage. All right. So the powers of the arbitrator are broad, which is great. And the dispute-resolution process is in place. So the terms of service, which we’re going to go through here in a minute, are much more detailed than that. But that gives you the general overview of what’s happening in arbitration.

The Extenuating Circumstances Policy (ECP)

Now, let’s take a look at the extenuating circumstances policy. This is where we’ve done this initial analysis between endemic and epidemic. Right. And this is what we’ve posted on. So let’s just take a look at some of the terms here that are going to apply. So the first thing is — let’s just go back here. Let’s go to the terms of service. And let me just show you a little bit about just the provision section 19. This is some of the analysis that we’ve done here on dispute resolution. This is some of the work that we’re doing to be able to figure out how it is to navigate the system.

What is the best strategic approach to asserting your rights? The other thing that is going to be important are the consumer rules, which you can see are here. And I will just kind of show you the table of contents on these rules, 62 pages that have to be absorbed and navigated in your arbitration, which is why we think it makes sense to hire counsel even on a contingency-fee basis.

We are posting videos to educate Airbnb Hosts about their rights. Subscribe to the Airbnb Host Legal Channel Here.

Contingency Fee Cases Against Airbnb

So we are handling certain some early cases on a contingency fee, and blended contingency fee, especially the cases that sign up early. We make no guarantee we’ll continue to do this. But right now, we’re willing to do it. And by — the fee that you’re going to pay us we believe is going to be less than the return on investment you’re going to get by using counsel. If you have to figure out all this yourself, the time and money it’s going to take you, the value of time it’s going to take you, the fact that you do not have the expertise required is going to reduce your chances of success. So you’re going to have to understand all these rules if you do it yourself. It’s not impossible. But certainly, it makes sense to hire someone with the expertise to navigate this system.

A Deeper Dive into the ECP

So let’s take a look really quickly at the extenuating circumstances policy. And this is a screen capture by archive.org. One of the things that we have noted is that Airbnb scrubbed this policy from its website after COVID-19 and replaced it with a different extenuating circumstances. They did not provide any notice that we’ve been able to determine let alone the 30-day notice they’re required to under their own terms in order to change the policy. So let’s just — broad view. You have a strict cancellation policy. That applies. The terms of service allow extenuating circumstances to override that strict cancellation policy. So what are the extenuating circumstances? And keep in mind this is the only justification that Airbnb has given for its refund. Well, let’s look at some of the language here. The extenuating circumstances policy is supposed to be in rare circumstances, only if Airbnb determines that a guest’s reasons for cancellation falls within the policy. And in that case, it may override the host’s decision and its own policy on cancellations. So what are the things that may or may not be covered? So valid circumstances include unexpected death or serious illness.

So let’s say one of the hosts or the guests got COVID. That would be an extenuating circumstances. That would be something that Airbnb theoretically in its discretion could grant a refund on. What about urgent travel restriction or severe security advisories issued at the time of the booking by an appropriate national authority? So travel restrictions could be a reason if, in fact, those restricts precluded you from getting to the property. We haven’t had any national restrictions on air travel. But if you’re coming from overseas, you might have that. And you might fall within the policy. Now, here is the big change. They used to — they did not include pandemic in the prior policy, the one that would apply to you. They only included endemic disease, which is like malaria in a very small section — geographic section or only applies to a certain category of person by race, what have you. That is an endemic disease.

No, A Pandemic Is Not An Extenuating Circumstance

Lawyers for Airbnb specifically did not include pandemic or epidemic in this exceptional circumstances policy. So the question becomes, well, why, if it’s not part of the policy, part of the terms that were — everyone agreed to, why did they, after the fact, try and change the policy to include pandemic, not give notice to anyone as required under the terms and try and hide the evidence of what the policy used to be? And that’s a big driver of what’s happening with our arbitrations and litigation on behalf of hosts. So a government-mandated obligation issued at the time of booking — so if you’re in a state that bans travel, then that might be an extenuating circumstances.

You’ll notice that nothing in here just allows Airbnb to carte blanche, without any analysis of a specific situation, without going through the process allow for a cancellation en masse outside of the process. In fact, let’s take a look at the process. The only way you can even fall within the extenuating circumstances policy is after a reservation has been cancelled. That’s not what happened here obviously. They told people to cancel their reservations and made the determination ahead of time. And they require documentation to be provided.

So this is the core of why we are talking to hosts and why hosts are talking to us. This is an archive page that was deleted from Airbnb’s website. So let’s talk a little bit about what we are doing for hosts. Right now, we’re really in the early process of bringing arbitrations on behalf of hosts on an individual basis, going through the policy. What we hope to do is to file an action collectively on behalf of all hosts globally or at least all hosts outside the United States under Irish law, as provided under the terms, which specifically allows collective action.

Stay Informed About What Is Happening

Now, again, in a future video, we’ll talk about this. For those people who make a donation to the global effort, we’re going to give you tremendous value because we’re going to give you legal advice. We’re going to do the legal analysis you normally have to pay a lot of money for from an attorney. But in general, you just need to understand this, that there’s two different types of claims. There’s collective claim. There’s individual claims. We’re going to be bringing individual claims. We’re going to be doing some of those on a contingency-fee basis on behalf of hosts. What we really want to do is bring a collective claim to be able to say everyone’s in the same boat. The terms mean the same for everyone. If a term of service is unenforceable, it should be unenforceable for everyone. If Airbnb breached by not following its extenuating circumstances policy, by not giving 30-day notice, then it breached for everyone. Why should everyone have to bring an individual claim on that? Now, this collective claim has been barred under the terms of service. Airbnb does not want you to act collectively. They only want you to be able to have individual rights to discourage you from having any leverage over them, from discouraging action.

There Are No Class Actions, But….

We believe there is an avenue by which we can have those terms declared invalid to allow collective action. Now, this could be great for the COVID-19 situation. But it could really be good moving forward because, if hosts can speak with a collective voice — and I’m a host, right — we can actually get Airbnb to pay attention to hosts, to accommodate hosts, to do the types of things that hosts have been asking for for a long time and to stop treating hosts as secondary citizens.

That’s where are in the process.

Reasons to File Your Arbitration Early

If you’re ready to bring an individual arbitration, contact us now. We’re willing to take a look at your case on a contingency-fee basis. The arbitration system may get backlogged very quickly as hosts file. Getting your arbitrator assigned now, means you get through the process before things get backed up.

Airbnb Hosts Need to Act Collectively

We can make a difference if we spread the word and we act collectively. All right. If you have any questions, feel free to email me. You have my email address. And we’ll see you in the next video.

We are posting videos to educate Airbnb Hosts about their rights. Subscribe to the Airbnb Host Legal Channel Here.