AirBnB, the poster-child of the sharing economy, has found itself in yet another sticky legal situation. The popular apartment-sharing website just got served with a subpoena from New York Attorney General Eric Schneiderman. The AG is requesting three years’ worth of user data from 225,000 New Yorkers on the site to launch an investigation on the legality of the site’s operation in the city. The investigation is predicated on a 201o New York state law that makes it illegal for New York residents to rent out a property for less than 29 days, unless a resident is at home during the time of the rental stay.
AirBnB responded with a blog post and filed a motion with the New York Supreme Court to block the subpoena request:
“We always want to work with governments to make the Airbnb community stronger, but at this point, this demand is unreasonably broad and we will fight it with everything we’ve got…”
Users are responding too. Last week, a petition authored by a New York City AirBnB host named Michelle has garnered over 20,000 signatures to fight the AG’s subpoena. Michelle is asking the state’s senate to fix the “poorly written law” “As a New Yorker just trying to pay my bills,” Mishelle writes, “I don’t understand why they think I’m a slumlord.”
If AirBnB’s motion is dismissed, it is going to get slammed for handing over user data. The company is built on peer-to-peer trust and a subpoena like this threatens that very foundation. Perhaps it’s time for AirBnB to start thinking about publishing a transparency report, as many other websites do. Granted, it’s still unclear what the AG intends to do with the data, but if the goal is to compel users to comply with the state law, AirBnB will face a lot of backlash. This could also just be government intimidation at its finest, to raise a stir over user privacy and thereby push AirBnB to cooperate with the government’s requests or implement occupancy taxes.
Prior to the subpoena, AirBnB announced that it wanted to work with the city and address the AG’s concerns through an occupancy tax system and a local neighbor hotline to report abusers of the service. The problem is, even if they did implement these, the company still faces the issue of user compliance with the 2010 law. As of date, New Yorkers can only host guests when someone is at home, and State Senator Liz Krueger recently warned that those who don’t own the apartments or houses they’re renting out, are at risk of eviction.
It’s likely that they will face pushback from users, but implementing a tax might be the first step towards beginning to cooperate with the state, if the company wants to garner government support for rewriting the law to support short-term rentals. The question is, who will set the standards for the “streamlined system” of taxation that it hopes to implement? Without doubt these standards, and the legal ramifications of these disputes will have an impact on how the sharing economy continues to grow.
TIME writes that for companies like AirBnB “friendly regulation” might be the better route to take now, rather than facing lengthy legal disputes further down the road:
“Instead of fighting the system…companies…are beginning to accept that it’s better to try to shape the system to their liking as far as possible…Friendly regulation, after all, creates business certainty and opens the door to more growth.”
These challenges of oversight will continue grow as businesses and regulators debate how to legitimize these new technology-driven business practices and consumption patterns in statutory form. Legal scholar Tim Wu puts it best: “The challenge for regulators is to simultaneously allow change while protecting us from the worst effects of it. It is, in short, a time to think carefully, rather than banning first and asking questions later.”
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