1. Introduction

The European Commission has concluded that Airbnb has violated the Unfair Commercial Practices Directive, the Unfair Contract Terms Directive and the Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters.

The Commission and consumer protection authorities have therefore called on Airbnb to make changes. Airbnb is to submit proposed changes by the end of August. If Airbnb does not submit these proposals or the Commission does not consider them satisfactory, Airbnb may face legal consequences.

2. Violation of EU law

 a) Non-transparent prices

 When searching for accommodation on the Airbnb site, offers are displayed on the home page, including the price per night. However, at the bottom of the search page it states that the specific dates must be entered for the full price to be displayed, that additional charges will apply and that taxes may be added once the user has logged in.

The price shown therefore does not include Airbnb fees, which typically range from 6-12%, and taxes that Airbnb also deducts in some locations. In some cases, a cleaning or similar fee is also added to the price offered on the search page.

The price listed on the booking page is therefore generally higher than the price offered by Airbnb on the search page.

The Commission and respective supervisory authorities therefore require the price quoted on the search page to include all fees and, if it is not possible to calculate these fees in advance, to clearly inform consumers of the existence of such fees and how they are calculated.

A warning that additional fees may apply at the bottom of the search page, i.e. outside the presentation of the price, is not considered sufficient.

Airbnb will therefore have to submit a proposal so that the prices of accommodation are transparently displayed in the first offer, i.e. when searching for accommodation.

b) Distinction between private and professional providers

In its offers of accommodation, Airbnb does not distinguish whether the provider is a professional entrepreneur or private non-business person.

However, the Unfair Commercial Practices Directive considers a situation where an entrepreneur misleads the consumer about the nature of its activity, i.e. whether or not it is a business, as unfair. The lack of distinction between businesses and non-entrepreneurs offering accommodation may be misleading to consumers.

The distinction between business and non-business providers of accommodation can be crucial to the consumer when deciding what accommodation to choose. This distinction also has a significant impact on the status of the consumer, as the consumer has consumer protection in relation to professional providers of accommodation, but does not have such protection in case of a private non-business person because this is not a relationship between an entrepreneur and consumer.

Airbnb will therefore have to change the way offers are displayed, so that offers from entrepreneurs and non-entrepreneurs are clearly distinguished. This change will also affect the providers of accommodation as they will obliged to specify whether or not they are entrepreneurs.

c) Other defects in contract terms

Airbnb Terms of Service (“TS“) contain many provisions that do not comply with EU law. Some of these provisions significantly affect consumers’ rights. To remedy these deficiencies, Airbnb must make changes in the following areas:

• Jurisdiction of the courts. The TS use an unclear formulation to mislead the consumer to believe he/she is not entitled to exercise his/her rights in the courts of the Member State in which the consumer resides, which is in contravention to EU law.

Airbnb is therefore required to remove this formulation.

• Terms that remain binding after the termination of the contract. The TS state that terms that can be reasonably expected to be applicable even after the termination of the contract shall remain in effect. However, the TS do not include any way of determining which provisions will remain in effect or how this should be determined. Thus, Airbnb currently decides on such provisions unilaterally and without justification.

Airbnb must therefore clearly define which provisions of the TS shall remain in effect even after the termination of the contract and reasonably justify this decision.

• Limitation of liability. The TS significantly limit the liability of Airbnb and the providers of accommodation. However, Airbnb cannot deprive the consumer of their basic right to sue a host in case of personal injury or other damage.
• Change of terms and conditions. The TS allow a unilateral change of terms and conditions, including fees, without enabling withdrawal from the contract.

Airbnb cannot unilaterally change terms and conditions without clearly informing consumers in advance and without giving them the option to withdraw from the contract

• Termination or suspension of the contract. Termination or suspension of a contract by Airbnb should be explained to consumers, it should be governed by clear rules and it should not deprive the consumer of the right to adequate compensation or the right to appeal,
• Refunds. Airbnb’s policy on refunds, compensation and the collection of damages should be clearly defined and should not deprive consumers of their right to activate available legal remedies.

3. Conclusion

It is clear from the above that Airbnb has breached a number of obligations imposed by EU regulations and both its contract terms and the platform itself are facing major changes.

Most of these changes will only affect consumers, but some will also affect the rights and obligations of the providers of accommodation.

A major change will be the compulsory distinction between entrepreneurs and non-entrepreneurs and the mandatory inclusion of all fees in the opening price offer.

The uncertainty of relations between accommodated consumers and providers of accommodation will be healed by the removal of certain contract terms contradictory to EU law, especially with regard to the limitation of liability.

However, a specific proposal remedying the deficiencies described above is yet to be submitted by Airbnb and must subsequently be approved by the Commission and competent authorities. Only then will Airbnb proceed to implement these measures. Therefore, it may be several months before we can expect to see the implementation of the relevant changes.

For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail:jkucera@kuceralegal.cz ; tel.: +420604242241.