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New York State Cracks Down on Airbnb: Legal Pursuit Met with Defiance, Petition

By: Belén Marty - @belenmarty - Apr 28, 2014, 4:39 pm

EspañolSuccessful businesses naturally attract the attention of a wide variety of stakeholders, including public officials who seek to strictly enforce regulations. On this occasion, New York Attorney General Eric Schneiderman has filed an affidavit with the state Supreme Court in Albany, alleging several irregularities with the website Airbnb.

Airbnb is an online intermediary that provides homes, apartments, and rooms for short-term lease in more than 192 countries. On account of the peer-to-peer, informal nature of operation, however, Schneiderman has requested details regarding the company’s operations in New York, but as of now, Airbnb has refused to comply with the prosecutor’s inquiry.

Schneiderman began his investigation last year when he discovered that users of Airbnb’s service do not pay taxes on the money collected from rental properties.

Last November, the prosecutor’s office responded to an attempt by Airbnb to quash the subpoena by adding, “it is illegal for residents of Class A buildings (residential) to rent their apartments for a period of less than 30 days, unless they are present in the apartment.”

On April 21, one day before the scheduled court date, Airbnb removed 2,000 rental listings in the New York area. In an opinion piece published on April 22 in the New York Times, Schneiderman stressed that “consumer protection is the duty of the regulators” and said the fact that the company removed its New York ads from its website suggests their concerns are not unfounded:

“Cyberlibertarians argue that regulators often lack the tools or know-how to provide smart enforcement. They are not entirely wrong. But that doesn’t mean that regulation is unnecessary. Nor does it excuse those same critics for refusing to work with the government agencies…”

“Enough is Enough”

Meanwhile, Airbnb defended its position through a statement published on its website:

“The bottom line is clear: Airbnb makes New York more affordable for New Yorkers and our community generates real benefits for everyone in New York. The Airbnb community will generate $768 million in economic activity in New York in 2014 and support 6,600 jobs. Travelers will have the chance to stay in unique spaces and visit small businesses in all five boroughs, and the Airbnb community will pay more than $36 million in sales taxes.”

In a separate statement, the company expressed its firm disagreement with the charges leveled by prosecutors in New York:

“Everyone in the Airbnb community, people who care about privacy and countless New Yorkers said enough is enough. This attack on thousands of regular New Yorkers who occasionally rent out their homes was a wrongheaded waste of time and law enforcement resources. We weren’t going to take it.”

Nick Papas, spokesman for Airbnb, told the New York Post that “[Schneiderman is] targeting thousands of regular New Yorkers just trying to make ends meet.”

The same article quotes Schneiderman, during a conference with political and business leaders at the New York Athletic Club, as saying he would protect the “extraordinarily successful” hotel industry.

The prosecutor emphasized that the problem is not with those who occasionally rent out a room in their home, but those who use the service to rent out multiple properties, which in practice become hotel businesses. “What is illegal is running illegal hotels,” he said.

Schneiderman added that what Airbnb is, in effect, doing is “selling to investors they are a hotel network and they are telling the public that they are not.”

In a statement for the Daily News, Shcneiderman also argued that there is a safety issue at stake for Airbnb users, since hotels must implement fire safety measures and other precautions that Airbnb does not require of its home owners. He emphasized that Airbnb earns half of its revenue from the operation of illegal hotels that do not pay taxes.

Petition for Airbnb

Evelyn Badia, a member of the Airbnb community and host, has created an online petition in an effort to gather 25,000 signatures to be delivered to the attorney general’s office. The petition, which has 22,752 signatures after just two days (as this story goes live), requests that the attorney general discontinue what she considers to be a defense of the hotel industry’s interests and to begin to protect “all New Yorkers.”

Badia explains that “many people are struggling in today’s economy and people like me depend on Airbnb to pay the mortgage and keep the lights on.” She urges New Yorkers to “support the sharing economy and Airbnb.” She also agrees with Airbnb that this type of internet platform can bring substantial benefits to the economy.

Translated by Guillermo Jimenez.

Belén Marty Belén Marty

Belén Marty is the Libertarian Latina, a journalist based in Buenos Aires, Argentina. She has lived in Guatemala, Jordan, the United Arab Emirates, and the United States and is a former candidate for local office with Argentina's Libertarian Party. Follow @BelenMarty.