Yahoo Finance Airbnb gives in to regulator's demand to test for racial discrimination by hosts
Airbnb will allow the government to test for racial discrimination by hosts as part of an agreement with California that is the first of its kind and could pave the way for stricter regulations and greater public scrutiny.
The California Department of Fair Employment and Housing (DFEH) announced Thursday that it had resolved a complaint it filed against Airbnb with an agreement that forces the company to permit the state to conduct “fair housing testing” of certain hosts. That means that for the first time the San Francisco-based company is giving a regulatory body permission to conduct the kind of racial discrimination audits that officials have long used to enforce fair housing laws against traditional landlords.
The resolution of the state’s ten-month investigation is significant given that Airbnb, like many popular “sharing economy” companies such as Uber and Instacart, has repeatedly resisted existing industry regulations, arguing that it is a “platform” and not subject to local laws and requirements that apply to similar businesses.
The DFEH’s original complaint – which had not previously been disclosed – was based on research and a growing number of reports suggesting that hosts regularly refuse to rent to guests due to their race, a problem exposed last year under the hashtag #AirbnbWhileBlack.
On social media, black Airbnb users reported experiences of facing a rejection by a host, who later accepted them when they changed their profile to a white person. Earlier this month, an Asian American woman’s account of discrimination in California went viral after she said a host cancelled on her last minute specifically because of her race, leaving her stranded in a storm.
Harvard Business School professor Ben Edelman previously found that black users were 16% less likely to be accepted than identical guests with white names in a study that analyzed thousands of listings across the US.
Airbnb operates in a legal grey area when it comes to longstanding civil rights laws that outlaw racial discrimination in public accommodations, such as hotels and restaurants. Although it has a policy against discrimination and has adopted rules aimed at curbing the problem, Airbnb has continued to argue that it is not legally liable when hosts on its platform discriminate against guests.
As a result, critics say it has been difficult for researchers, regulators and individual victims of discrimination to scrutinize the company and hold hosts accountable. In its complaint, the DFEH alleged that Airbnb failed to prevent discrimination against African American guests and that the company should be held liable for violations.
Airbnb’s new agreement with DFEH is limited in scope. It allows the state to do fair housings tests on hosts in California who have been subject to discrimination complaints and have three or more listings. There are about 76,000 hosts in California, but according to the company, only 6,000 have three or more listings.
The tests would mirror the process investigators have used in traditional rentals where black and white applicants, who otherwise have identical backgrounds, are both sent to try and secure a lease from a landlord. With Airbnb, DFEH investigators could set up fake accounts and make reservation requests to determine if a host is discriminating.
“This is the kind of testing that historically has been used to prove race discrimination,” DFEH director Kevin Kish said in an interview. “I do think it will make a difference.” He also said the agreement could be a “model” for other jurisdictions.
But Edelman, the Harvard professor, argued that a state agency shouldn’t need a private company’s blessing to do these kinds of tests and that California should aggressively scrutinize hosts in a broader manner.
“The regulator amazingly needs their permission to regulate,” he said. “A policeman doesn’t need my permission to use a radar detector to see if I’m speeding.”
Airbnb has previously thwarted testing efforts by preventing people from creating multiple accounts, which the company considers a violation of its policies. Edelman himself was suspended from using Airbnb for that reason. In the new agreement, Airbnb said it would not interfere with DFEH’s investigations even though the government’s creation of accounts might violate terms of service.
Airbnb will now also provide reports to the state about guest acceptance rates by race and the company has further agreed to advise users with discrimination complaints that they have a right to file a grievance with the DFEH.
Airbnb, which hired former US attorney general Eric Holder to investigate discrimination on the platform, said in a blogpost that the “voluntary agreement” was based on “collaborative work” with the government and builds on its existing policies.
Edelman said he hoped the California agreement could encourage other states to pursue similar regulations, noting that the state has led on numerous policy matters, such as the regulation of automobile emissions.
“There’s a potential roadmap of an approach here,” he said. “The other states could look at this and say … ‘Why should Airbnb be allowed to discriminate in ways that are intolerable in California?’”
