Court fines Airbnb $15 million for deceiving customers to pay higher prices
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In a landmark ruling that has sent shockwaves through the online accommodation industry, Airbnb has been slapped with a hefty $15 million fine for misleading tens of thousands of Australian customers into paying inflated prices for years.
The company is also set to pay millions more in compensation to affected customers.
The Australian Competition and Consumer Commission (ACCC) took Airbnb to the Federal Court in June last year.
It accused the global tech giant of duping customers into paying for their accommodation bookings in US dollars between January 2018 and August 2021 without making it clear to them.
This resulted in customers being charged a higher price for accommodation compared to what was listed on the platform.
Airbnb defended its actions by stating that customers had agreed to be charged in US dollars because the abbreviation 'USD' was written in tiny font at the final stage of the booking process.
However, at the time, the Australian dollar was worth about 72 US cents. This meant that a customer who thought they were paying $500 for a booking would have actually paid almost $700 before any currency conversion fees.
On Wednesday, 20 December 2023, Justice Shaun McElwaine ruled that this conduct, known as 'AUD Representation', was deceptive and misled customers, breaching Australia's consumer law.
'In making the AUD representation, Airbnb engaged in conduct that was misleading or deceptive or likely to mislead…contrary to Australian consumer law,' Justice McElwaine said.
Airbnb was also found to have been engaging in 'selection representation' by falsely claiming some customers gave their approval to be charged in US dollars.
Justice McElwaine ruled that Airbnb is obligated to pay a $15 million fine for breaching Section 244 of the Australian Consumer Law and pay the ACCC's costs of $400,000.
The Federal Court kept specific information about compensation for impacted customers confidential ‘to prevent prejudice to the administration of justice’.
However, the ACCC verified that Airbnb plans to provide compensation to approximately 63,000 affected customers who made over 70,000 bookings in US dollars.
The ACCC estimated that the overall value of the compensation program could reach $15 million, and affected customers may receive approximately $230 each. The amount depends on their booking cost, the exchange rate, and extra charges.
Last year, Susan Wheeldon, Airbnb's Country Manager for Australia and New Zealand, assured ABC that the online accommodation platform would fully reimburse all affected customers.
Despite the Federal Court's decision, Wheeldon stated that Airbnb remains committed to compensating customers and estimates the cost to the business at about $15 million.
'Ensuring our guest community is able to book with confidence and enjoy a positive travel experience is our top priority and at the heart of everything we do, and we have worked constructively with the ACCC throughout this process,' she said.
'While only a very small percentage of Australian guests are believed to have been impacted, we are disappointed that this happened. Airbnb would like to apologise to those guests.'
Details about whether a potential breach of a previous undertaking has also been suppressed, meaning only those involved in the case and court staff will have access to them.
The Airbnb pricing controversy has highlighted the importance of transparency in online transactions, particularly in the travel and accommodation industry. The practice of displaying prices in a foreign currency without clear disclosure can lead to confusion and unexpected costs for consumers.
Aside from this controversy, Airbnb Australia received backlash over a complaint from its guests. In a previous story, a Google Engineering Director shared her disappointment with an Airbnb host who expressed frustration over her not vacuuming the unit.
But Airbnb Australia is now making its stance clear on this issue. Read more about it here.
Have you been affected by this issue? Share your experiences with us in the comments below.
The company is also set to pay millions more in compensation to affected customers.
The Australian Competition and Consumer Commission (ACCC) took Airbnb to the Federal Court in June last year.
It accused the global tech giant of duping customers into paying for their accommodation bookings in US dollars between January 2018 and August 2021 without making it clear to them.
This resulted in customers being charged a higher price for accommodation compared to what was listed on the platform.
Airbnb is fined $15 million for deceiving customers. Credit: Wikimedia Commons
Airbnb defended its actions by stating that customers had agreed to be charged in US dollars because the abbreviation 'USD' was written in tiny font at the final stage of the booking process.
However, at the time, the Australian dollar was worth about 72 US cents. This meant that a customer who thought they were paying $500 for a booking would have actually paid almost $700 before any currency conversion fees.
On Wednesday, 20 December 2023, Justice Shaun McElwaine ruled that this conduct, known as 'AUD Representation', was deceptive and misled customers, breaching Australia's consumer law.
'In making the AUD representation, Airbnb engaged in conduct that was misleading or deceptive or likely to mislead…contrary to Australian consumer law,' Justice McElwaine said.
Airbnb was also found to have been engaging in 'selection representation' by falsely claiming some customers gave their approval to be charged in US dollars.
Justice McElwaine ruled that Airbnb is obligated to pay a $15 million fine for breaching Section 244 of the Australian Consumer Law and pay the ACCC's costs of $400,000.
The Federal Court kept specific information about compensation for impacted customers confidential ‘to prevent prejudice to the administration of justice’.
However, the ACCC verified that Airbnb plans to provide compensation to approximately 63,000 affected customers who made over 70,000 bookings in US dollars.
The ACCC estimated that the overall value of the compensation program could reach $15 million, and affected customers may receive approximately $230 each. The amount depends on their booking cost, the exchange rate, and extra charges.
Last year, Susan Wheeldon, Airbnb's Country Manager for Australia and New Zealand, assured ABC that the online accommodation platform would fully reimburse all affected customers.
Despite the Federal Court's decision, Wheeldon stated that Airbnb remains committed to compensating customers and estimates the cost to the business at about $15 million.
'Ensuring our guest community is able to book with confidence and enjoy a positive travel experience is our top priority and at the heart of everything we do, and we have worked constructively with the ACCC throughout this process,' she said.
'While only a very small percentage of Australian guests are believed to have been impacted, we are disappointed that this happened. Airbnb would like to apologise to those guests.'
Details about whether a potential breach of a previous undertaking has also been suppressed, meaning only those involved in the case and court staff will have access to them.
The Airbnb pricing controversy has highlighted the importance of transparency in online transactions, particularly in the travel and accommodation industry. The practice of displaying prices in a foreign currency without clear disclosure can lead to confusion and unexpected costs for consumers.
Aside from this controversy, Airbnb Australia received backlash over a complaint from its guests. In a previous story, a Google Engineering Director shared her disappointment with an Airbnb host who expressed frustration over her not vacuuming the unit.
But Airbnb Australia is now making its stance clear on this issue. Read more about it here.
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