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> I spoke to Airbnb about EJ’s situation. They won’t reimburse her for damages This is bad news. They're going to backtrack on this. The sooner they do it, t

by tc 15y ago

> I spoke to Airbnb about EJ’s situation. They won’t reimburse her for damages This is bad news. They're going to backtrack on this. The sooner they do it, the better for them politically. I understand the problems of setting a precedent. And there really is no getting around the fact that the hosts do have the final responsibility for screening travelers (and travelers for screening hosts). But rightly or wrongly, they're going to end up on the wrong side of this story unless they make things right for this gal and can tell Arrington and other journalists, "we've made sure our customer is whole." After saying that, they can use this as a learning exercise for their community about how screening hosts and travelers yourself is important. -- [Edit]: Is she in San Francisco? It looks like she is. She called SFPD. This is an easy one. Brian, Joe, or Nathan needs to be out there to provide a shoulder to cry on and an open checkbook to fix anything that money can fix. Nothing in that apartment costs more than the value of the ammunition this is going to give to their enemies. The earlier they do this, the more quietly they can do it, which serves their purposes as well. [Edit #2]: Some form of insurance might be a worthwhile addition to their offering, but that's something they can debate and decide on after they put out this fire. [added:] Also, insurance doesn't solve the safety issues involved here, so they're still going to need to emphasize the importance of screening travelers (and hosts) carefully. [Edit #3]: EJ doesn't sound particularly litigious in her post, but consider what happens if she does decide to sue AirBnB and any part of it makes it to a jury. I mean, HackerNews is lining up against them. Consider what 6-12 normal people might decide. The wise move would be to make sure that she's fully satisfied with the way they treated her. [Edit #4]: Arrington updated the article after speaking with Brian Chesky. Brian, Joe, Nathan and company did the right thing here, as you would expect.

shakes 15y ago
I wonder who advised them against reimbursing her... their lawyers? It seems like a no-brainer. I've been fascinated with AirBnB. I'm taking a week-long vacation in August and have been considering listing my NYC apartment to help offset some vacation costs. Their response in this situation totally turned me off from the idea. I'm sure I'm not the only one.
- msluyter 15y ago
  I will ask my lawyer girlfriend this question (IANAL), but based on previous conversations I've had with her, my bet would be that any reimbursement could be construed as an admission of guilt/liability, and could be used as evidence in a civil trial. (Consider the extra costs of a trial alone, plus the possibility of punitive damages for pain & suffering and whatnot if they lose.)
  - hristov 15y ago
    Your lawyer girlfriend would probably say that offers for settlement or reimbursement are usually not admissible as evidence of guilt. I think the bigger problem is that if they reimburse this person they can set up an expectation that everyone will get reimbursed for damages to their home, and they cannot afford that.
    - msluyter 15y ago
      Yes, correct. She said that it wouldn't constitute an admission of liability, just a bad precedent that could easily be abused.
- danso 15y ago
  Really? If they reimbursed her, wouldn't that make them liable for any other future incidents?
jordank 15y ago
Two-sided marketplaces are perfect when all actors are reasonable, but upon mainstream adoption many services invite whole range of unreasonable actors. Services that exist in a known niche probably can't scale the way that mass-market services can, but the actors are probably far more predictable.
- rdmltrs9 15y ago
  This is why AirBnB will never be the ebay of spaces like they aspire to be. Our personal spaces are always at risk with AirBnB unlike product transactions on Ebay.
  - Kadin 15y ago
    Actually I think there are a lot of parallels with eBay. I remember the very early days of that service, when there was a lot of interpersonal communication, transactions were friendly, you could send personal checks without raising an eyebrow, etc. When it became mainstream, all that went away very quickly. I remember the first time I got screwed on an eBay transaction I thought it was just a random, unfortunate thing -- "well, I've been using this a lot, I guess it was bound to happen." Then it happened again. Pretty quickly I realized that things were going downhill, and the trust I'd put in other users of the service was no longer reasonable. I think that's the direction that AirBnB is headed, unless they take steps to intentionally restrict their growth and remain in a niche market. Eventually they'll have to do what eBay has done, and make the transactions as anonymous and automated as possible, and probably push all but the big commercial operations (who can absorb the fraud risk that gets pushed onto sellers) out of the market. But the upside is, I think there's a market for services like AirBnB that are still niche. As AirBnB grows and becomes less and less pleasant to do business with, and as the risk involved in every transaction grows (as it did with eBay), there's an opportunity for someone to create a competitor that's tailored to a specific niche market. Or maybe one that's built on top of a social network, so that you're always renting from a friend of a friend or something. There are a lot of possibilities I could imagine. But AirBnB seems to be going for mass-market adoption and I think that's the death of a friendly, trusting community if it involves money.
deleted 15y ago
[deleted]
breck 15y ago
At the least, I hope someone starts a fund for this girl. I'd contribute. This is a terrible story.
- arepb 15y ago
  I would kickstart a little for this.
  - wynand 15y ago
    I remember I had difficulty contributing to Kickstart since I'm in the Netherlands. Is there someone here that can set up a Paypal account for this gal? I'd happily donate a few $.
- Cushman 15y ago
  Makes me think— Who says someone else has to insure Airbnb? Let's say they add an invisible $1 insurance fee to each booking, that goes into a fund to pay interim damages only when an actual crime is committed. Cases like this are so rare, and although the damage is horrific to one person the dollar amount is trivial on the scale Airbnb operates. Seems like a perfect case for a shared risk pool that actually works rather than insurance. Then they could peg the cost of the insurance fee at a realistic share of your risk, and the theoretical cost of someone trashing the place would be built into the cost of the room.
  - alex_c 15y ago
    This opens Airbnb up to the risk of significant insurance fraud. Insurance companies have the infrastructure to deal with it, but Airbnb doesn't - and presumably doesn't want to build it.
    - MichaelApproved 15y ago
      If the premiums were juicy enough, an existing insurance company could cobrand with them to offer it. They can also limit their liability with a cap on the damages covered.
jellicle 15y ago
As was pointed out before, it's not possible to get insurance for this - homeowner's insurance specifically disclaims damage from renters, and it's generally not legal to rent your premises like this unless you comply with all the hotel rules, so AirBnb can't take out insurance either. All they can do is self-insure, and if they start paying out, people will realize "Hey, I can get a new TV if I let my friend come and trash my old one". And yet your analysis of this particular case is spot-on. They stand to get CRUSHED by this story. Damned if they do, and damned if they don't.
- deleted 15y ago
  [deleted]
- VladRussian 15y ago
  >and it's generally not legal to rent your premises like this unless you comply with all the hotel rules, so AirBnb can't take out insurance either. can UberCab happen here, ie. some zealous DA would come down on AirBnB itself and/or subpoena the records of people renting out?
  - jellicle 15y ago
    Sure. I would think that sooner or later, the hoteliers in, say, Manhattan would start complaining about people engaging in hotel business without following the hotel rules. There's a financial incentive as well: http://www.nyc.gov/html/dof/html/business/business_tax_hotel.shtml http://www.nyc.gov/html/dof/html/business/business_tax_hotel... So yes, at some point I'd say it is likely that AirBnb's records are going to be used against their customers. Some of AirBnb's customers aren't breaking the law, but some are.
- pavel_lishin 15y ago
  What AirBNB could do is help the victim sue the criminal for damages in court. Lend her the support of their legal team. Of course, the odds that the criminal has anything left to take are low...
- MichaelApproved 15y ago
djb_hackernews 15y ago
I would imagine this would be a situation that homeowners insurance is for. But I bet homeowners insurance won't cover damage caused by running your home as a hotel. If not, then Airbnb should have some sort of insurance for these situations. Can't have all of the upside and none of the downside. Not to mention if this happens a few more times, Airbnb's business model will be legislated away.
- cookiecaper 15y ago
  As above, airbnb already exists in a kind of legal gray area. There are very few places where it's actually legal according to municipal/zoning rules to rent out rooms this way. Not to mention the significant legal intricacies incumbent in offering insurance to consumers like that.
  - djb_hackernews 15y ago
    Agreed. And the laws should either be changed or enforced. I don't fault Airbnb for that. However I don't agree that because there are legal intricacies a company valued at over 1 billion dollars shouldn't protect its financial future.
- AndyJPartridge 15y ago
  In the UK one needs specific landlord insurance for this situation. I expect that unless you rented out your space a lot in a given policy year, it may render it unprofitable to do so.
  - arethuza 15y ago
    Most mortgages in the UK have the condition that you need to inform the lender if you are letting the property and there may also be requirements for electrical and fire safety. I hate to think of the potential liabilities if someone got injured in your home and you didn't have the right insurance.
Gaussian 15y ago
Techcrunch is just the beginning. Douse this now. Ensure everybody knows that this experience was an outlier and that Airbnb exists for its users; make the girl whole.
lr 15y ago
Airbnb is a brokerage for what is probably an illegal activity in a lot of places. The hotel industry is regulated for the same reason taxis are regulated. I love the concept of Airbnb, but I just can't see how it can really make it in the long run. In this case, and in all others, Airbnb can not be responsible for this kind of stuff. Also, I highly doubt a homeowners policy is going to cover it because the person was renting out their place (again, probably illegally).
- jdminhbg 15y ago
  "The hotel industry is regulated for the same reason taxis are regulated." Yes -- to drive up prices for the cartels who control entry into the market.
  - lr 15y ago
    Yes, that is partially true. However, the major reason is safety and liability. I have spent quite a bit of time overseas, and jumping in some random car of questionable roadworthiness, with an equally questionable driver, is not really something that the average citizen should have to deal with on a regular basis. If you don't want hotels or taxis regulated, then perhaps the same could be said for all businesses, and housing (construction regulations), etc. If that is the case, then please be sure to be in Iran or Afghanistan the next time there is a major earthquake, and then tell me that regulation is about the "cartels who control entry into the market".
    - cnyc 15y ago
      Well put.
  - VladRussian 15y ago
    well, not that i support these taxes, yet just for illustration, SF hotel tax is also a source for grants to arts and culture programs which supposedly make the City more appealing (again i have no informed idea about the effectiveness and alternatives to such a tax program)
  - 15y ago
wheels 15y ago
I understand the problems of setting a precedent. I don't, actually. If the financial industry has taught us one thing, it's that you can insure anything. Let's assume that this is a very rare occurrence and that the total cost of making this right (say, tops $100k?) can be amortized over the profit being generated. I have a hard time understanding how it'd be rocket surgery to get something in place to handle these cases, especially just after a $112 million cash infusion. Everyone keeps bringing up fraud, but fraud is nothing new to insurance and there are centuries of practices established in that industry for dealing with such – i.e. it will happen, it can be minimized by establishing premiums, requiring police reports, and, again, amortizing the cost of fraud over the spread of valid commerce. [Edit replying to parent's #2 edit] Sure, this one needs to be out of pocket. Actually, it'd probably be easier for them to insure now since there's a data point for how often this will happen per x number of rentals. Handling one of these out of pocket can't be a biggie for a company with several orders of magnitude more cash in the bank. And with a multi-billion dollar valuation, there will be institutional insurers that will be willing to build up a risk profile for them and work out a policy to handle these these things in the future.
- chailatte 15y ago
  AirBnb is illegal in some of the states (and when states/hotel industry/cities get a wind of this story, it will probably be illegal in all the states), so I doubt any legitimate insurance companies will be handling this affair.
  - barrkel 15y ago
    That statement doesn't seem based in logic: it doesn't follow. Lots of things are illegal in different countries, but that doesn't stop legitimate businesses operating in countries where such things are legal. For example, online gambling is illegal in the US, but that doesn't stop legitimate (US-headquartered) credit card companies dealing with online gambling companies in the UK. Also, if it were indeed the case that AirBnb is soon to be illegal, it would make more sense for insurance companies to sign them up: the risk of AirBnb being shut down ought to reduce the likelihood that they'll need to pay out.
StrawberryFrog 15y ago
> "we've made sure our customer is whole." When it gets to personal things like "found ... grandmother's jewelry" and "I don't have the mental energy to take those last few steps into my apartment. It's too creepy in there anyway." It's really hard to "make someone whole" with a cash payout. There's a lot of distress involved. It's not just a case of "TV was stolen, TV costs $500, here's $500". There's family heirlooms and emotional trauma involved. Aside from that difficulty, you're perfectly right.
- westicle 15y ago
  "we've made sure our customer is whole." - why do you assume this statement refers to monetary compensation? Might be just me but i didn't read it like that at all.
  - StrawberryFrog 15y ago
    It's hard to see what else you can do about destroyed family heirlooms.
estel 15y ago
The article has been updated with information from Brian Chesky where he clarifies that AirBNB have offered financial compensation and are trying to go "above and beyond".
teyc 15y ago
I'm reminded of PayPal's early days when fraud was a big problem (and probably costed a lot more than a trashed apartment). If AirBnB handles the risk well, it may well set up a high barrier of entry to other me-too enterprises trying to do the same thing.
prawn 15y ago
I'm not even sure that the precedent it'd create is a big issue. They'd be as much paying to shutdown angles of bad press as anything else and this is so volatile because it's the first big story along these lines for them, it's beyond a basic theft and it's emotionally written. Future incidents probably won't contain those three elements. Down the track, they can say "Sorry, that other time was a once-off, we have many T&C/suggestions that cover what's happened" and the victim is going to have to be unnaturally persistent with the press to create a story this damaging.

by tc 15y ago

shakes 15y ago

I wonder who advised them against reimbursing her... their lawyers? It seems like a no-brainer. I've been fascinated with AirBnB. I'm taking a week-long vacation in August and have been considering listing my NYC apartment to help offset some vacation costs. Their response in this situation totally turned me off from the idea. I'm sure I'm not the only one.

msluyter 15y ago
I will ask my lawyer girlfriend this question (IANAL), but based on previous conversations I've had with her, my bet would be that any reimbursement could be construed as an admission of guilt/liability, and could be used as evidence in a civil trial. (Consider the extra costs of a trial alone, plus the possibility of punitive damages for pain & suffering and whatnot if they lose.)
- hristov 15y ago
  Your lawyer girlfriend would probably say that offers for settlement or reimbursement are usually not admissible as evidence of guilt. I think the bigger problem is that if they reimburse this person they can set up an expectation that everyone will get reimbursed for damages to their home, and they cannot afford that.
  - msluyter 15y ago
    Yes, correct. She said that it wouldn't constitute an admission of liability, just a bad precedent that could easily be abused.
danso 15y ago
Really? If they reimbursed her, wouldn't that make them liable for any other future incidents?

jordank 15y ago

Two-sided marketplaces are perfect when all actors are reasonable, but upon mainstream adoption many services invite whole range of unreasonable actors. Services that exist in a known niche probably can't scale the way that mass-market services can, but the actors are probably far more predictable.

rdmltrs9 15y ago
This is why AirBnB will never be the ebay of spaces like they aspire to be. Our personal spaces are always at risk with AirBnB unlike product transactions on Ebay.
- Kadin 15y ago
  Actually I think there are a lot of parallels with eBay. I remember the very early days of that service, when there was a lot of interpersonal communication, transactions were friendly, you could send personal checks without raising an eyebrow, etc. When it became mainstream, all that went away very quickly. I remember the first time I got screwed on an eBay transaction I thought it was just a random, unfortunate thing -- "well, I've been using this a lot, I guess it was bound to happen." Then it happened again. Pretty quickly I realized that things were going downhill, and the trust I'd put in other users of the service was no longer reasonable. I think that's the direction that AirBnB is headed, unless they take steps to intentionally restrict their growth and remain in a niche market. Eventually they'll have to do what eBay has done, and make the transactions as anonymous and automated as possible, and probably push all but the big commercial operations (who can absorb the fraud risk that gets pushed onto sellers) out of the market. But the upside is, I think there's a market for services like AirBnB that are still niche. As AirBnB grows and becomes less and less pleasant to do business with, and as the risk involved in every transaction grows (as it did with eBay), there's an opportunity for someone to create a competitor that's tailored to a specific niche market. Or maybe one that's built on top of a social network, so that you're always renting from a friend of a friend or something. There are a lot of possibilities I could imagine. But AirBnB seems to be going for mass-market adoption and I think that's the death of a friendly, trusting community if it involves money.

deleted 15y ago

[deleted]

breck 15y ago

At the least, I hope someone starts a fund for this girl. I'd contribute. This is a terrible story.

arepb 15y ago
I would kickstart a little for this.
- wynand 15y ago
  I remember I had difficulty contributing to Kickstart since I'm in the Netherlands. Is there someone here that can set up a Paypal account for this gal? I'd happily donate a few $.
Cushman 15y ago
Makes me think— Who says someone else has to insure Airbnb? Let's say they add an invisible $1 insurance fee to each booking, that goes into a fund to pay interim damages only when an actual crime is committed. Cases like this are so rare, and although the damage is horrific to one person the dollar amount is trivial on the scale Airbnb operates. Seems like a perfect case for a shared risk pool that actually works rather than insurance. Then they could peg the cost of the insurance fee at a realistic share of your risk, and the theoretical cost of someone trashing the place would be built into the cost of the room.
- alex_c 15y ago
  This opens Airbnb up to the risk of significant insurance fraud. Insurance companies have the infrastructure to deal with it, but Airbnb doesn't - and presumably doesn't want to build it.
  - MichaelApproved 15y ago
    If the premiums were juicy enough, an existing insurance company could cobrand with them to offer it. They can also limit their liability with a cap on the damages covered.

jellicle 15y ago

As was pointed out before, it's not possible to get insurance for this - homeowner's insurance specifically disclaims damage from renters, and it's generally not legal to rent your premises like this unless you comply with all the hotel rules, so AirBnb can't take out insurance either. All they can do is self-insure, and if they start paying out, people will realize "Hey, I can get a new TV if I let my friend come and trash my old one". And yet your analysis of this particular case is spot-on. They stand to get CRUSHED by this story. Damned if they do, and damned if they don't.

deleted 15y ago
[deleted]
VladRussian 15y ago
>and it's generally not legal to rent your premises like this unless you comply with all the hotel rules, so AirBnb can't take out insurance either. can UberCab happen here, ie. some zealous DA would come down on AirBnB itself and/or subpoena the records of people renting out?
- jellicle 15y ago
  Sure. I would think that sooner or later, the hoteliers in, say, Manhattan would start complaining about people engaging in hotel business without following the hotel rules. There's a financial incentive as well: http://www.nyc.gov/html/dof/html/business/business_tax_hotel.shtml http://www.nyc.gov/html/dof/html/business/business_tax_hotel... So yes, at some point I'd say it is likely that AirBnb's records are going to be used against their customers. Some of AirBnb's customers aren't breaking the law, but some are.
pavel_lishin 15y ago
What AirBNB could do is help the victim sue the criminal for damages in court. Lend her the support of their legal team. Of course, the odds that the criminal has anything left to take are low...
MichaelApproved 15y ago

djb_hackernews 15y ago

I would imagine this would be a situation that homeowners insurance is for. But I bet homeowners insurance won't cover damage caused by running your home as a hotel. If not, then Airbnb should have some sort of insurance for these situations. Can't have all of the upside and none of the downside. Not to mention if this happens a few more times, Airbnb's business model will be legislated away.

cookiecaper 15y ago
As above, airbnb already exists in a kind of legal gray area. There are very few places where it's actually legal according to municipal/zoning rules to rent out rooms this way. Not to mention the significant legal intricacies incumbent in offering insurance to consumers like that.
- djb_hackernews 15y ago
  Agreed. And the laws should either be changed or enforced. I don't fault Airbnb for that. However I don't agree that because there are legal intricacies a company valued at over 1 billion dollars shouldn't protect its financial future.
AndyJPartridge 15y ago
In the UK one needs specific landlord insurance for this situation. I expect that unless you rented out your space a lot in a given policy year, it may render it unprofitable to do so.
- arethuza 15y ago
  Most mortgages in the UK have the condition that you need to inform the lender if you are letting the property and there may also be requirements for electrical and fire safety. I hate to think of the potential liabilities if someone got injured in your home and you didn't have the right insurance.

Gaussian 15y ago

Techcrunch is just the beginning. Douse this now. Ensure everybody knows that this experience was an outlier and that Airbnb exists for its users; make the girl whole.

lr 15y ago

Airbnb is a brokerage for what is probably an illegal activity in a lot of places. The hotel industry is regulated for the same reason taxis are regulated. I love the concept of Airbnb, but I just can't see how it can really make it in the long run. In this case, and in all others, Airbnb can not be responsible for this kind of stuff. Also, I highly doubt a homeowners policy is going to cover it because the person was renting out their place (again, probably illegally).

jdminhbg 15y ago
"The hotel industry is regulated for the same reason taxis are regulated." Yes -- to drive up prices for the cartels who control entry into the market.
- lr 15y ago
  Yes, that is partially true. However, the major reason is safety and liability. I have spent quite a bit of time overseas, and jumping in some random car of questionable roadworthiness, with an equally questionable driver, is not really something that the average citizen should have to deal with on a regular basis. If you don't want hotels or taxis regulated, then perhaps the same could be said for all businesses, and housing (construction regulations), etc. If that is the case, then please be sure to be in Iran or Afghanistan the next time there is a major earthquake, and then tell me that regulation is about the "cartels who control entry into the market".
  - cnyc 15y ago
    Well put.
- VladRussian 15y ago
  well, not that i support these taxes, yet just for illustration, SF hotel tax is also a source for grants to arts and culture programs which supposedly make the City more appealing (again i have no informed idea about the effectiveness and alternatives to such a tax program)
- 15y ago

wheels 15y ago

I understand the problems of setting a precedent. I don't, actually. If the financial industry has taught us one thing, it's that you can insure anything. Let's assume that this is a very rare occurrence and that the total cost of making this right (say, tops $100k?) can be amortized over the profit being generated. I have a hard time understanding how it'd be rocket surgery to get something in place to handle these cases, especially just after a $112 million cash infusion. Everyone keeps bringing up fraud, but fraud is nothing new to insurance and there are centuries of practices established in that industry for dealing with such – i.e. it will happen, it can be minimized by establishing premiums, requiring police reports, and, again, amortizing the cost of fraud over the spread of valid commerce. [Edit replying to parent's #2 edit] Sure, this one needs to be out of pocket. Actually, it'd probably be easier for them to insure now since there's a data point for how often this will happen per x number of rentals. Handling one of these out of pocket can't be a biggie for a company with several orders of magnitude more cash in the bank. And with a multi-billion dollar valuation, there will be institutional insurers that will be willing to build up a risk profile for them and work out a policy to handle these these things in the future.

chailatte 15y ago
AirBnb is illegal in some of the states (and when states/hotel industry/cities get a wind of this story, it will probably be illegal in all the states), so I doubt any legitimate insurance companies will be handling this affair.
- barrkel 15y ago
  That statement doesn't seem based in logic: it doesn't follow. Lots of things are illegal in different countries, but that doesn't stop legitimate businesses operating in countries where such things are legal. For example, online gambling is illegal in the US, but that doesn't stop legitimate (US-headquartered) credit card companies dealing with online gambling companies in the UK. Also, if it were indeed the case that AirBnb is soon to be illegal, it would make more sense for insurance companies to sign them up: the risk of AirBnb being shut down ought to reduce the likelihood that they'll need to pay out.

StrawberryFrog 15y ago

> "we've made sure our customer is whole." When it gets to personal things like "found ... grandmother's jewelry" and "I don't have the mental energy to take those last few steps into my apartment. It's too creepy in there anyway." It's really hard to "make someone whole" with a cash payout. There's a lot of distress involved. It's not just a case of "TV was stolen, TV costs $500, here's $500". There's family heirlooms and emotional trauma involved. Aside from that difficulty, you're perfectly right.

westicle 15y ago
"we've made sure our customer is whole." - why do you assume this statement refers to monetary compensation? Might be just me but i didn't read it like that at all.
- StrawberryFrog 15y ago
  It's hard to see what else you can do about destroyed family heirlooms.

estel 15y ago

The article has been updated with information from Brian Chesky where he clarifies that AirBNB have offered financial compensation and are trying to go "above and beyond".

teyc 15y ago

I'm reminded of PayPal's early days when fraud was a big problem (and probably costed a lot more than a trashed apartment). If AirBnB handles the risk well, it may well set up a high barrier of entry to other me-too enterprises trying to do the same thing.

prawn 15y ago

I'm not even sure that the precedent it'd create is a big issue. They'd be as much paying to shutdown angles of bad press as anything else and this is so volatile because it's the first big story along these lines for them, it's beyond a basic theft and it's emotionally written. Future incidents probably won't contain those three elements. Down the track, they can say "Sorry, that other time was a once-off, we have many T&C/suggestions that cover what's happened" and the victim is going to have to be unnaturally persistent with the press to create a story this damaging.