Airbnb Faces Legal Heat In LA For Alleged Price Hikes Amid Wildfire Crisis

The tech firm is accused of breaching California’s anti-gouging regulations by allowing prices to surge beyond legal limits during a state of emergency.

While Airbnb has said it made efforts to prevent gouging, including programming error alerts when hosts attempt to raise prices above the legal limit, the city claims violations may still be ongoing.

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Los Angeles has filed a lawsuit against short-term rental platform Airbnb, alleging the company enabled illegal price hikes on thousands of rental properties during the Southern California wildfires in January.

According to Los Angeles City Attorney Hydee Feldstein Soto, the tech firm is accused of breaching California’s anti-gouging regulations by allowing prices to surge beyond legal limits during a state of emergency, reported Reuters.

In a complaint lodged with the Los Angeles Superior Court, the city claims that rental prices on at least 2,000 Airbnb-listed properties rose by more than 10 per cent between January 7 and January 17. The state’s anti-gouging law, triggered by Governor Gavin Newsom’s declaration of a state of emergency on January 7, prohibits prices of essential goods and services—including housing—from increasing by more than 10 per cent during such periods.

The lawsuit notes that the price spikes occurred before Airbnb disabled its "smart pricing" tool, a feature that automatically adjusts listing rates based on local demand, for both Los Angeles and Ventura counties. The city alleges that this failure allowed unlawful rent increases at a time when residents were vulnerable and displaced by disaster.

Accusations of Misrepresentation and Continued Violations

Feldstein Soto also raised concerns about Airbnb’s verification processes, accusing the San Francisco-based company of misleading users by advertising certain hosts and property locations as "verified" when, in some cases, the listings either did not exist or were misrepresented.

While Airbnb has said it made efforts to prevent gouging, including programming error alerts when hosts attempt to raise prices above the legal limit, the city claims violations may still be ongoing. The lawsuit seeks a court order to halt unlawful pricing during emergency periods, as well as civil penalties of up to $2,500 per infraction.

In a statement, Airbnb defended its conduct, citing a contribution of nearly $30 million through Airbnb, its CEO Brian Chesky, and its nonprofit arm Airbnb.org, towards wildfire recovery efforts. The company says it also provided free emergency accommodation to nearly 24,000 individuals impacted by the fires.

The January wildfires, including the Palisades Fire in Pacific Palisades and the Eaton Fire in Altadena, devastated large swathes of Southern California, claiming at least 30 lives and destroying or damaging over 16,000 structures. The affected area is reported to exceed the size of Paris.