A lawsuit filed Friday by two Airbnb “hosts” claims that the $25.5 billion company’s entire business model is illegal.
The complaint, filed by Francesco Plazza and Sylvie Naude — the proprietors of Indigo House, a Midtown-based firm offering luxury short-term rentals in units around the city – asserts that Airbnb acts as an unlicensed real estate broker.
The fees it collects from users who arrange rentals through its site are therefore unlawful, the complaint asserts.
“What may seem a novel and convenient enterprise is, at bottom, entirely illegal,” the complaint reads.
The plaintiffs – represented by attorneys Lucas Ferrara and Jeffrey Norton of Newman Ferrara LLP – are seeking class-action status.
They are pursuing damages equal to the fees Airbnb collected from them as hosts and guests, plus a 400 percent penalty for fees collected within the past six years, plus punitive damages, according to the suit.
Airbnb collects fees for each rental transaction its service facilitates, equal to between six and 12 percent of the rent charged. These damages could potentially apply to all of Airbnb’s users, the suit says.
“The claims in this lawsuit have no merit and we are confident that the case will be dismissed,” an Airbnb spokesperson said in a statement.
Plazza and Naude’s firm, Indigo House, based out of Jack Resnick and Sons’ Symphony House at 235 West 56th Street, advertises furnished apartments throughout the city for rent on a per-month basis, via its website.
Although Indigo House’s website states that its rentals are not sublets, it advertises units for rent at Symphony House, a rental building.
Last month, a court upheld the eviction of a rent stabilized tenant at Related Cos.’ MiMa apartment tower at 450 West 42nd Street who had rented his unit through Airbnb.
Earlier this week, independent data analysts Murray Cox and Tom Slee released a report asserting that Airbnb had purged over 1,000 controversial listings from its site just prior to its much-hyped release of New York City user data late last year.
A study by hospitality research firm STR also released this week found no solid evidence that Airbnb’s service was cutting into hotel revenues the city.
A statement from Airbnb was appended.
Kyna Doles contributed reporting.
Source: The Real Deal