Airbnb Sues San Francisco Over New Rental Regulations

June 29, 2016 Updated: October 5, 2018

Airbnb, the home renting company, is suing its home city of San Francisco over new rental regulations.

The regulations require, as of Aug. 1, Airbnb to verify that the listings on its website are posted only by hosts who are registered with the city.

Yet the company says the city can’t do that as a federal law protects internet companies from liability for content submitted by users.

The lawsuit aims to stop the new regulations from taking effect in August.

Housing Shortage

San Francisco has been struggling with a housing shortage since at least the 1990s.

Between 2007 and 2014 the city managed to build about 65 percent of the housing units needed to keep up with burgeoning population.

Moreover, while the city needed almost 19,000 homes for moderate-to-low income residents, it only managed to build a little over 7,000.

Airbnb has been accused of exacerbating the problem by giving people a way to turn available apartments into hotel rooms, rather than rent them to long-term residents.

Airbnb reported over 9,400 listings in San Francisco by more than 7,000 hosts in March 2016, according to the city’s Budget and Legislative Analyst’s Office (BLAO).

Based on previously reported data, the majority of the listings offer entire apartments for rent, as opposed to just a room or a shared room.

Until last year, renting apartments in the city for less than 30 consecutive days was illegal.

Renting Requirements

Since then, the city allowed residents to offer their homes for short term renting, including through Airbnb, but imposed a number of restrictions.

  • People can only rent like this their primary residence, where they actually live most of the year.
  • They can only rent the whole apartment for a maximum of 90 days a year.
  • Hosts have to obtain a city business license, register in-person and pay a $50 fee, provide quarterly reports on when they had guests staying in the apartment, and submit and pay taxes off a list of all items their guests may use, including sheets and kitchenware.
  • They also have to pay a 14 percent occupancy tax, though they may choose to pay it through Airbnb.

But by March 2016 the city had only received 1,647 registration applications, covering less than 25 percent of hosts on Airbnb, not even considering other platforms offering a similar service.

The Budget and Legislative Analyst’s Office also identified 261 hosts who rented apartments for more than 90 days last year, breaking the city rule.

The new regulations would require Airbnb to collect a city-issued registration number from each host and verify the number is accurate before allowing a listing to be published.

Airbnb argues such a requirement violates Section 230 of the Communications Decency Act (CDA) of 1996.

The law, in part, states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

It usually means that a website can’t be held responsible for its users posting something illegal.

The city’s new regulations violate the law by forcing Airbnb to verify if users actually provided real registration numbers before posting their rental listings online, the company’s court filing states.

Listings Under Same Principle as Alcohol Sales

The San Francisco City Attorney Office argues the new regulations don’t apply to user content but to Airbnb itself.

“It’s the same principle for online vendors of alcohol and cigarettes,” stated the office’s spokeswoman Andrea Guzman in an email. “All businesses that sell those products have a legal duty to verify the age of their customers, whether it’s online or at the corner store, so they don’t sell alcohol and cigarettes to children. They, too, are required to verify information that’s already required for their regulated business activity.”

Indeed, Michigan, for example, requires wine sellers to obtain a copy of a photo ID or use an approved age verification service to confirm legal age of buyers.

Experts are divided on the Airbnb issue.

“This imposition of liability clearly goes against Section 230,” stated G.S. Hans of the Center for Democracy & Technology in a blog post. “[A]nything inconsistent with Section 230—like the imposition of liability on a website operator for user-generated content—is unlawful.”

Marc Rotenberg, executive director of the Electronic Privacy Information Center, thinks otherwise.

“I don’t think it’s a (Communications Decency Act) or First Amendment issue,” he told SFGate. “If you’re operating a business on the internet and providing business-related information pursuant to licensed activity, it seems entirely reasonable that you comply with those obligations.”

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