Airbnb faced a hefty fine of more than $10 million for a pricing discrepancy affecting Australian users. An Australian court determined that the platform had been displaying listing prices in US dollars instead of Australian dollars from 2018 to 2021.
Facing Fines, Compensation Payments
Airbnb is facing substantial fines and compensation payments after a federal court in Australia ruled that the platform misled consumers about its pricing strategy from 2018 to 2021, as reported by The Verge.
The Australian Competition and Consumer Commission (ACCC) announced on Wednesday that Airbnb must pay 15 million Australian dollars (approximately $10.1 million) in penalties for not making it clear to users that pricing was in US dollars, not Australian dollars.
The ACCC found that consumers were misled, assuming the prices listed on Airbnb's Australian website were in Australian dollars due to the presence of a dollar sign next to the figures. In addition to the fines, Airbnb will provide compensation to affected users.
As a result of being billed in US dollars, certain users incurred higher costs for their accommodations than anticipated, and some faced additional charges from their banks due to currency conversion.
ACCC reported that around 70,000 consumers experienced these repercussions, with 2,000 users lodging complaints with Airbnb about the matter from January 2018 to August 2021.
The discrepancy was addressed on the Airbnb platform in August 2021, with the addition of the term "USD" next to pricing, as highlighted in the ACCC's statement.
Resolving the Issue
Upon identifying the currency clarity issue, Business Insider reported that Susan Wheeldon, Airbnb's country manager for Australia and New Zealand, promptly resolved it.
She highlighted the company's commitment to ensuring guests can book with confidence for a positive travel experience, emphasizing this as their top priority. Wheeldon also expressed regret for the incident and extended an apology to affected guests.
Airbnb, in addition to paying penalties to the ACCC, is set to provide compensation of up to AU$15 million (approximately $10.1 million).
As outlined on the press release, compensation will encompass the variance between Australian and US currency at the time of users' bookings and any foreign currency exchange costs incurred by users when making Airbnb reservations.
Each impacted consumer is slated to receive around AU$230 or $156, with the exact compensation contingent on individual bookings. Airbnb intends to contact affected consumers by February 5, 2024.
The recent decision by the ACCC adds to Airbnb's legal challenges, following the enactment of a New York City law in 2022 that imposed restrictions on short-term rentals, affecting nearly 40,000 listings in the city.
Approximately 77,000 reservations were made by 63,000 users. The Guardian reported that Airbnb has already refunded the entire accommodation cost to an additional 8,000 users, totaling A$9.4 million. However, the court determined that the overall value difference between Australian and US pricing for the implicated bookings was $16.8 million.
Of this amount, Airbnb would have generated around A$9 million in revenue. In compliance with the agreed-upon orders by the ACCC and Airbnb, the company is set to pay a $15 million fine along with A$400,000 to cover the commission's court costs.
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