Airbnb is not a perfect system, and the popular short-term rental platform's growth and dominance in the travel industry have raised ethical concerns in recent years. These concerns are why travel expert Rick Steves says travelers should rethink booking through Airbnb. The platform is increasingly by dishonest hosts who attempt to trick guests with common Airbnb bait-and-switch scams or create unavoidable problems that are causing travelers to ditch the app entirely. Airbnb has now been banned or strictly
regulated in several major cities, including New York, Barcelona, Paris, and even its birthplace, San Francisco. Its latest controversy in Los Angeles, where it is being sued by the State of California for allegedly price gouging after the devastating wildfires in January 2025, could cost the company more than just its reputation.
In July 2025, the state of California has filed a case in Los Angeles Supreme Court, accusing Airbnb of violating the state's price gouging protections between January 7 and 17 of 2025. According to the state, more than 2,000 Airbnb properties increased prices by more than 10% after Governor Gavin Newsom declared a state of emergency. If confirmed, these increases would have occurred while the state's price-gouging law was in effect, which prohibits businesses from increasing the cost of their services by more than 10% during emergencies. Violations could result in cumulative fines of up to $2,500 per listing, as well as refunds for guests who were overcharged.
This alleged price hikse were linked to Airbnb's "smart pricing" feature, which automatically adjusts rates based on demand and was reportedly not disabled during the 10-day period. Airbnb is refuting the claims, saying it prevented unlawful price increases by blocking hosts with error messages.
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Airbnb Faces Significant Consequences If Found Guilty
City Attorney Hydee Feldstein Soto, representing the state of California, said that there is evidence Airbnb illegally raised prices during and after the state of emergency, which was extended multiple times. She also accused the company of listing rentals that didn't exist, misleading people in need of housing. "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 in a press release.
If Airbnb is found liable for these allegations, the Los Angeles Supreme Court could order the company to stop additional price violations during the ongoing state of emergency, in addition to $2,500 civil fines (non-criminal) per infraction. Under the state's price-gouging law, these fines could rise to as much as $10,000 per listing. Airbnb continues to dispute these allegations, highlighting nearly $30 million in aid and free housing provided by its chief executive and nonprofit arm to people affected by the Palisades and Eaton wildfires.
"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," a company spokesperson said, per NBC Los Angeles. However, it still remains to be seen whether these allegations will hold in court and result in significant financial and legal consequences for Airbnb. With an estimated 80% share of the Los Angeles short-term rental market alone, the outcome of the case could have sweeping effects across California and beyond.
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