Airbnb is not an ideal system, and the rapid expansion and strong presence of this well-known short-term rental platform in the travel sector have sparked ethical questions in recent years. These issues includeWhy travel expert Rick Steves believes travelers should reconsider booking via Airbnb. The platform is increasingly being used by dishonest hosts who try to deceive guests withcommon Airbnb bait-and-switch scams or create inescapable issues leading travelers to stop using the app completelyAirbnb is now either prohibited or heavily controlled in numerous large cities, such as New York, Barcelona, Paris, and even its origin city, San Francisco. The company’s most recent issue in Los Angeles, where it is being sued by the State of California for allegedly inflating prices following the severe wildfires in January 2025, might result in consequences beyond just damaging its image.
In July 2025, California initiated a legal action in the Los Angeles Supreme Court, alleging that Airbnb breached the state’s price gouging regulations between January 7 and 17 of the same year. The state claims that over 2,000 Airbnb listings raised their prices by more than 10% following Governor Gavin Newsom’s declaration of a state of emergency. If proven true, these price hikes would have taken place while California’s price-gouging law was active, which bans businesses from raising service costs by more than 10% during emergencies. Breaches of this law could lead to total penalties of up to $2,500 for each listing, along with reimbursements for guests who were charged excessively.
This supposed price hike was connected to Airbnb’s “smart pricing” tool, which automatically modifies rates according to demand and was reportedly not turned off during the 10-day span. Airbnb is denying the allegations, stating that it stopped illegal price increases by sending error messages to hosts.
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Airbnb Could Suffer Major Consequences if Found Responsible
City Attorney Hydee Feldstein Soto, who speaks on behalf of the state of California, stated that there is proof that Airbnb unlawfully increased prices during and following the state of emergency, which was prolonged several times. She also claimed the company advertised properties that weren’t real, deceiving those in need of shelter. “It’s unacceptable that Airbnb allowed prices to be inflated on thousands of rental units when so many people had lost so much and required a place to stay,” Feldstein Soto remarked in a statement.press release.
If Airbnb is held responsible for these claims, the Los Angeles Supreme Court may require the company to cease further price violations while the state of emergency is in effect, along with $2,500 civil penalties (not criminal) for each violation. According to the state’s price-gouging legislation, these penalties could increase to as high as $10,000 per listing. Airbnb still contests these accusations, pointing out that its CEO and nonprofit organization have provided nearly $30 million in aid and free housing to individuals impacted by the Palisades and Eaton wildfires.
“In reaction to the state’s emergency declarations, Airbnb took steps to assist hosts in understanding their responsibilities regarding price hikes in Los Angeles,” a company representative stated, according toNBC Los Angeles. However, it is still uncertain whether these claims will be validated in court and lead to substantial financial and legal repercussions for Airbnb. Given its estimated 80% presence in the Los Angeles short-term rental market, the case’s resolution could have wide-reaching impacts throughout California and further afield.
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