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Airbnb’s Money-Laundering Problem

• user5994461 9y ago
  It makes no sense. Reservations have to be paid by cards, the money is already laundered if it's sitting behind a card in a bank account.
  • runeb 9y ago
    Read the article. They are stolen credit cards.
    • glastra 9y ago
      From the Guidelines: > Please don't insinuate that someone hasn't read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that." In my opinion, OP is actually right. It's not money laundering, but simply carding/stealing.
      • runeb 9y ago
        Fair point
    • MichaelGG 9y ago
      That doesn't even make sense to call money laundering, even under the ridiculous expansive views of the non-crime that people refer to as money laundering these days.
  • laurencei 9y ago
    Money laundering is not always about stolen cards though. It is sometimes about turning dirty money into clean money and getting it legally into your hands. So you can buy pre-paid VISA debit cards with cash though. Or you could open a fake bank account, put the "illegal" cash there under a false name. Then "cycle" cash through AirBnB. Clean cash on the other side in your name.
    • lightbyte 9y ago
      >It is sometimes about turning dirty money into clean money and getting it legally into your hands. It is not sometimes that, that is literally the definition of money laundering. Stolen cards have nothing to do with it.
• philfrasty 9y ago
  So let me get this straight: 1.) they book a night at a cooperating-host with a stolen credit card 2.) host receives payment minus AirBnB fees 2 days later 3.) host transfers amount minus his own cut to criminals 4.) chargeback from CC owner. I'd guess that Airbnb either charges the Host for the chargeback or cancels the entire account. How is this „scalable laundering“?
  • ryanlol 9y ago
    You create lots of host accounts, or just buy them and change the attached bank accounts. This at least used to be very easy. For many this can be better than e.g. Stripe because AirBnB supports payouts to far more countries, making it easier to get lots of drop accounts. They even do WU in some countries. I would also expect AirBnB to be slower to act on chargebacks than Stripe & Co. I wouldn't expect this to be super scalable, but on the other hand while a few million a month is nothing for AirBnB it is an OK amount even when split across 100 eastern european guys.
    • danso 9y ago
      > For many this can be better than e.g. Stripe because AirBnB supports payouts to far more countries This is a bit OT, but I looked up the Airbnb page to see what they accept: https://www.airbnb.com/help/article/126/what-methods-of-payment-does-airbnb-accept https://www.airbnb.com/help/article/126/what-methods-of-paym... I had thought that the general solution for handling worldwide payments was to use Paypal. How does Airbnb facilitate the handling of all these different kind of payment services? Is it a homegrown solution? Or is it not really a major technical problem for services to implement this on their own?
      • huac 9y ago
        built in house https://medium.com/airbnb-engineering/scaling-airbnbs-payment-platform-43ebfc99b324 https://medium.com/airbnb-engineering/scaling-airbnbs-paymen...
      • toast0 9y ago
        PayPal is a US centric general solution for handling worldwide payments. It kind of works worldwide, but is painful/inconvenient for many in some countries. If those countries are major sources of business, it's probably worth making it easier for the customers to spend money. Payment processing is a pain, but it's not that hard to integrate, maybe a few weeks of dedicated engineering plus ocassional maintenance and an account rep to deal with issues/problematic payments. This is big when you're a small company and getting paid is clearly important, but not a central focus of your product; it's not so big when you've got thousands of employees and brokering payments is a key part of your business.
• Von_Jones 9y ago
  There are real world hotel, many in Africa, which do precisely this.
• zodPod 9y ago
  I really don't understand how this is Airbnb's problem. Why do people attack these kinds of services so often? It's not their fault people are paying through them and then having people send the money back. What are they supposed to do? Send someone to the home to check that the person is actually staying there? I mean, the way this works you could literally use any service ever. Why is AirBnB, in this case, any different than like Paypal, eBay, or Amazon or literally any online fund transferring for goods service?
  • Xixi 9y ago
    I fail to see your point: Paypal, eBay and Amazon are also under the obligation to adequately monitor and prevent money-laundering.
    • zodPod 9y ago
      My point is they call AirBnB out specifically when they're not the only ones that have this issue and that could be used to do this. They even state in the article that AirBnB is just being used as an example and many services could be seeing this kind of usage. If that's the case, why call out AirBnB specifically? That company gets so much flack for the way its users act. I'm not sure what it's expected to do in many of these cases.
      • kerkeslager 9y ago
        > That company gets so much flack for the way its users act. Gig economy companies blur the line between user and employee. If a hotel chain had a problem with its hotel managers laundering money, would you be saying this? What you're saying here is tantamount to claiming that AirBnB isn't responsible for its employees' actions because they didn't bother to vet their employees. Companies aren't simply exempt from laws because their business model refers to their employees as "users".
        • headShrinker 9y ago
          The gig economy is individuals leveraging their time and personal assets to make money. They aren’t employees, just like a musician playing a pub isn’t an employee. purpose of a company to provide a product or service on a scale larger than one person could provide. A company’s primary goal isn’t to police employees the same way Facebook isn’t responsible for the content I write on their website. They have some duty to clean up afterwords but they do very little in the way of supervision. If someone does an investigation and finds criminal behavior the company has a responsibility to report that behavior to authorities. A company wants to avoid damaging its reputation over something like a laundering scheme. The Uber and Airbnb model is more like a credit card gateway for a specific industry and their ideal user is, ‘I’m an individual who does whatever I want with my time and property and I would like to make some money on the side’ that is not an employee’s mindset. Its a little upsetting that there are people who are more invested in their Airbnb and Uber status therefore claim employee status. If my YouTube channel takes off and I make a bunch of money on views can I claim employee status at yt? Clearly the answer is no
• todd8 9y ago
  Money-Laudering is sometimes confused with different crimes because, in the modern world, it is often a necessary adjunct to financially motivated crimes. Criminals often do business in cash and can't report it on their income taxes. Money laundering is getting this "dirty" cash safely into a bank account or legal investment without revealing the crimes that caused the accumulation of cash. In the US, banks are required to "know" their customers. Moving between cash and bank accounts is only possible with an account at the bank and every cash transaction over 10K is reported to the government. Furthermore, traveling with more than 10K into or out of the country requires paperwork to be filed with the government. All of this makes it difficult to use the cash sourced from criminal activity. AirBnB appears to be an easy way to launder a modest amount of money. Heidi Fleiss was the Hollywood Madam and would have had a "dirty" money problem, not a huge dirty money problem like drug cartels, but nevertheless, lots of cash and no way to explain it to the banks: one million dollars in her first four months[1]. It doesn't seem like AirBnB would be practical for such a large operation; however, think of one of her operatives, they might be able to hide a couple of thousand dollars a week of cash income by pretending to be renting out their place as an AirBnB. The challenge would be on the payment side to AirBnB, setting up enough cards under fake names, etc. because the government also tracks these and would detect any trivial cycles between a set of cards and or people. The Netflix TV series Ozark, a Breaking Bad kind of show, but staring an accountant rather than a chemist, revolves around this problem. [1] https://en.wikipedia.org/wiki/Heidi_Fleiss https://en.wikipedia.org/wiki/Heidi_Fleiss
• notyourday 9y ago
  This is not money laundering. This is a simple case of extracting money out of stolen goods. Since unauthorized transactions on CC would be reversed, it is at most inconvenient.
  • tjbiddle 9y ago
    Example of extracting money out of stolen goods: Selling a stolen phone. Example of money laundering: I have illegitimately earned money, I funnel it through a service which then gives me "clean" money. I wouldn't say it's money laundering, but I wouldn't say it's not money laundering. Is there a word for where it's kinda-both?
    • notyourday 9y ago
      The fundamental characteristic of money laundering is that after money is laundered it is in fact clean money and it is not possible for another entity to reach out and get it because the entity that a claim on the dirty money. That's why those with dirty money are willing to pay 20-40% for it. That's for example, why uncut diamonds are so popular - diamond sourcing business is largely a cash business operating in the grey area - dealers act as mixers of currency sell uncut diamonds for $X. The buyer takes the diamond to a jeweler, gets a finished product, sells it to a different jawler for $Y where $Y is 20-40% lower than $X and that $Y is nearly impossible to link to the initial $X. Carders cannot do this because no one in businesses like this takes credit cards as the transactions simply gets reversed by the issuing bank at which point whoever was the first hop of the transaction gets money crawled back from him/her.
• eliben 9y ago
  The actual title is "Inside Airbnb’s Russian Money-Laundering Problem", which is more suitable IMHO, as it highlights this is a local issue in Russia, not AirBnB as a whole
  • nkurz 9y ago
    What makes you confident in asserting this? While it appears to be Russian speakers who are looking for cooperative hosts, it's not at all clear that the issue is limited to Russia. From the article: The laundering may work outside Russia as well. In another post, a sixth scammer, who is also willing to split the cash 50-50, says they are looking for hosts and “the country does not matter,” their post reads. Another post on a Russian-language forum is looking for EU-based hosts.
• ChuckMcM 9y ago
  I expect that a good question to ask as a founder of a new business these days is, "How might this be used to launder funds?" and if you're the bad kind of entrepreneur make that really easy to boost early growth, and if you're the good kind put controls in place to prevent it from happening. One of the things I dealt with at Blekko was people clearly trying to use the search engine to find sites with vulnerable (unpatched) Wordpress or Joomla or other storefront frameworks. We spent a lot of time banning IP addresses which were doing that rather than treat them as higher traffic numbers.