Making Sense of Airbnb’s Binding Arbitration Terms

On May 19, 2016, Airbnb demanded all of its U.S. users to agree to its new Airbnb Terms of Service.

If you click “I disagree” instead of “I agree,” you can no longer have access to Airbnb.

disagree

So, if you want to use the tool that disrupted the hotel industry, be aware of some significant changes to your rights and protections.

1. No More Airbnb Host Protection Insurance

Airbnb no longer offers its Airbnb Host Protection Insurance Plan of $1 million in coverage.

Whether you are a host or a guest, you now need your own insurance if you want to be insured against damage claims.  Scope of coverage will be subject to your home or renter’s insurer’s policy and exclusions.

2. No Access To Courts, Only Binding Arbitration

If you have a dispute with Airbnb, you must use arbitration with the American Arbitration Association (AAA) to try to resolve your claim.

AAA for arbitration is becoming somewhat like what AAA (American Automobile Association) roadside service is for cars, but for businesses.  It is a form of insurance against a headache – here, rather than avoiding being left stranded with a flat tire, it is avoiding going to court or defending against class action lawsuits.

Arbitration is an expedited dispute resolution procedure where a neutral appointed lawyer or retired judge review submitted evidence and make a binding decision that will be court-enforced.

AAA for arbitration was initially a place for business to business disputes, but over the past decade, businesses are starting to demands consumers use the process, as well.

If you, as the host or guest, have a claim against Airbnb, you will have to send in a notice of demand for arbitration to Airbnb and AAA.  There is a $200 filing fee, which Airbnb says it will cover in certain circumstances.

Arbitration is intended to be a simple, quick and hopefully fair alternative to the court procedure.  Here is how Airbnb approaches AAA arbitration:

Value of Your Airbnb Claim

  • Less than $75,000, Airbnb will cover all AAA fees.
  • Over $75,000, you cover filing fee and your share of other AAA fees

How Your Airbnb Dispute Will Be Resolved

  • Claim $10,000 or less, decided only by documents (e.g., receipt, booking request, email exchange)
  • Claims over $10,000, will be decided in an in-person or telephonic hearing

Airbnb Arbitration Fees

Fees are governed by AAA’s rules.

  • $200 filing fee
  • $750 one-time arbitrator fee for desk/documents-only hearing
  • $1,500 one-time arbitrator fee for telephonic/in-person hearing
  • $500 flat administrative fee for telephonic/in-person hearing

Attorney Fees

  • Airbnb waives any right it may have to seek attorney fees or expenses if it wins arbitration
  • You do not waive this right

Selecting the Arbitrator

The arbitrator is supposed to be a neutral third party to a dispute.  Airbnb and the claimant should try to select such a person (either a retired judge or a licensed California attorney) within 7 days of filing a claim.   The terms state that state law of California governs the terms and your use of Airbnb’s service.  Location of an in-person hearing will be in the county where the user resides, unless otherwise agreed.

Impact on Consumer

  • No class actions.
  • No multi-party, consolidated arbitrations.
  • No jury trial.
  • If you lose, no right to appeal to a court.
  • If Airbnb loses, they do not have a right to appeal to a court.

According to AAA’s Q1 2016 Consumer Statistics Report, since 2015, only six AAA claims were filed by Airbnb consumers.  All of them settled for an undisclosed amount before arbitration.  The consumer claims ranged in value from $363.00 to $15,000.

Copyright 2016 The Filutowski Law Firm, PLLC. Disclaimer: This page is intended for general information purposes only and should not be construed as legal advice or legal opinions on any specific facts or circumstances. An attorney-client relationship is not created or continued.