When landlords offer living space through Airbnb, they pay Airbnb 3.6 percent of the agreed-upon lodging rate per booking in agency fees. At the same time, tenants pay an average of 15 percent of the rent as service charges to Airbnb. That seems like double. An Airbnb customer thought so too and started a lawsuit about it. He was proven right by the court in Amsterdam. A setback for Airbnb with major consequences.
Reason
What is the background of the case? The customer rented seven vacation rentals through Airbnb between 2016 and 2018. For these, he had to pay a total of €470.00 in service fees. However, the landlords also paid a fee to Airbnb: agency fees. In the lawsuit, the client argues that this violates the legal prohibition of “serving two masters”: a mediator may only charge mediation fees to one of the parties. in 2015, the Supreme Court already settled a long-running discussion about this. This case partially revives that discussion, but this time for Airbnb.
The Amsterdam court’s assessment
Airbnb argued at the hearing that it is not an intermediary, but only a platform on which people can offer and search for homes. If so, the prohibition against “serving two gentlemen” would not apply to it. The judges do not go along with this. Airbnb mediates because it actively interferes in all aspects of the formation of the rental agreement. Airbnb’s mediation ensures that the landlord and tenant cannot directly contact each other prior to the conclusion of the lease. In doing so, the judges are following the Supreme Court’s 2015 ruling. In addition to the discussion at the Supreme Court in 2015, Airbnb argues that the ban on double mediation fees does not apply to non-permanent housing. The judges do not go along with this either. According to the legislative history, the legal prohibition covers any housing accommodation, which therefore includes temporary rentals.
Airbnb further argues that its services are governed by Irish law because the company is based there. Therefore, Dutch law, such as the prohibition on “serving two masters,” could not be invoked. Again, the judges do not go along with this. The company’s general terms and conditions do indeed state that Irish law applies. Only, they also state that if the mandatory law of the customer’s country is more favorable, that law applies. Since (mandatory) Dutch law is more favorable to tenants than Irish law, Dutch law applies. That means the prohibition of “serving two masters” can be invoked. So Airbnb may only charge mediation fees once. And that, according to the law, must then be charged to the landlord. The judges concluded that charging the mediation fees for the client’s seven bookings violates the law. Airbnb must therefore refund these mediation fees.
What does this mean for other tenants who have paid mediation fees?
Instead of about 18.6% (the mediation fees of landlord and tenant combined), Airbnb is only entitled to 3.6% because of the ruling. This poses a problem for Airbnb because now, with this ruling in hand, other tenants can also go to court to reclaim wrongfully paid mediation fees. Retroactively. Airbnb has asked the court to take into account the large financial impact this ruling could have on the company. The court does not go along with this. In the proceedings, it was established that Airbnb in China only charged mediation fees to the landlord. This shows, the court said, that it is not impossible or unacceptable for the company to adjust its business.
The lawsuit immediately received a lot of media attention. The case was started by a collective that wants to put an end to Airbnb’s practice of charging fees to both the landlord and the tenant. The collective has now created a website where tenants are helped to reclaim their mediation fees from Airbnb.
Appeal not possible?
Airbnb has already indicated it will appeal the ruling. This makes sense given the major implications. According to Airbnb, the ruling conflicts with European legislation. It also does not share the judge’s view that Airbnb is an intermediary. Airbnb denies that it is a mediator, and believes that the ban on “serving two masters” therefore does not apply to it. Airbnb says it follows the rules and places great value on the rights of their users.
Airbnb has only a procedural problem. At the hearing, the parties opted for the Article 96 Rv procedure. That is a quick arbitration procedure in the district court. The parties must agree in advance whether an appeal is possible. What has been agreed on this is unknown. Even if it has been agreed, there is a problem: the appeal limit. No appeal is possible in cases about a claim lower than €1,750.00. The case discussed here involves € 470.00 in mediation fees. Under Article 80 of the Judicial Organization Act, it is possible to appeal to the Supreme Court against a judgment of the subdistrict court against which no appeal is possible. To do so, the exceptions of section 80 of the RO Act must be met. These do not arise in the case of Airbnb. Whether a higher court will ever rule on this matter is therefore highly questionable.
This article was written by student intern Manou Roijen and Mr. J.H. (Henk-Jan) Ligtenberg affiliated with the Real Estate practice group.
