Airbnb facing lawsuit for allegedly price gouging during LA wildfires

Los Angeles sues Airbnb over price gouging

The city of Los Angeles is suing Airbnb, claiming the platform price gouged renters during the January fires in LA.

LOS ANGELES - City Attorney Hydee Feldstein Soto announced Friday that the city of Los Angeles filed a civil enforcement action against Airbnb. The lawsuit accuses the company of price-gouging more than 2,000 properties during the January wildfires in the Pacific Palisades and Altadena.

Lawsuit details

What we know:

Airbnb, the most popular short-term rental site in the world, was sued for violating California Penal Code section 396 — the Anti-Gouging Law — prohibiting prices of essential goods and services, including rental homes, from rising more than 10% after a state of emergency is declared. Governor Gavin Newsom put the law into effect on January 7, 2025.

The state of emergency has been extended multiple times by the governor, Mayor Karen Bass and the LA County Board of Supervisors (BOS). On June 24, it was extended again and made it illegal for Airbnb to increase the prices of its rental homes by 10%.

"It’s unconscionable that Airbnb permitted prices to be jacked up on thousands of rental properties at a time when so many people lost so much and needed a place to sleep," Feldstein Soto said.

The January wildfires led to an extreme need for short-term housing, with many residents booking rentals on Airbnb after being forced to evacuate. 

LA County raises price gouging penalty after wildifres

After recent studies showed thousands of rental listings in Los Angeles appearing to violate price gouging laws in Los Angeles after the California wildfires, LA County raised the penalty for price gouging from $10,000 to $50,000.

Airbnb accounts for an estimated 80% of the short-term rental market in LA, and it’s believed that hundreds or even thousands of residents used the rental site to seek shelter.

The lawsuit was filed under the state’s Unfair Competition Law, seeking a permanent injunction preventing Airbnb from charging illegal rents.

Airbnb’s response

What they're saying:

In a statement to City News Service, a spokesperson for Airbnb said the rental company disputes the claims and has been supporting recovery efforts for those affected.

"In response to the state's emergency declarations, Airbnb took action to help hosts understand their obligations with respect to price increases in Los Angeles," the company said. In the statement, they note Chief Executive Brian Chesky and non-profit Airbnb.org’s donation of nearly $30 million towards relief efforts, including free emergency housing to 24,000 people.

Airbnb also claims that the hosts who tried to increase prices by more than 10% what it was before the fires received an error message.

The city attorney’s office says Airbnb allegedly misled renters on who were "verified" hosts, the lawsuit details that some hosts used false identities and listed addresses that either were inaccurate or didn’t exist.

What's next:

The city is now requesting restitution to guests who were charged and civil penalties of up to $2,500 for each violation.