Los Angeles has initiated legal action against Airbnb, accusing the home rental giant of enabling widespread price gouging during January’s devastating Southern California wildfires. The city alleges that rental rates surged by more than 10% across at least 2,000 Airbnb listings between January 7 and 17, the period when Governor Gavin Newsom had declared a state of emergency, thereby activating California’s anti-gouging law. This law prohibits the prices of essential goods and services, including housing, from increasing by more than 10% after an emergency declaration.
City Attorney Hydee Feldstein Soto contends that Airbnb’s “smart pricing” tool allowed property owners to automatically raise rents based on demand before Airbnb deactivated the feature in Los Angeles and Ventura counties. Despite Airbnb’s claims that error messages were sent to hosts attempting to breach the 10% limit, city officials argue that hundreds of unlawful price hikes may have continued even after intervention. The complaint further accuses Airbnb of misleading marketing practices, including representing property hosts and locations as “verified” when some did not exist.
In its defence, Airbnb highlighted its humanitarian efforts, stating that nearly $30 million was contributed to wildfire recovery initiatives, and almost 24,000 people received free emergency housing through the platform. The company asserts it is committed to complying with state law and supporting affected communities.
The lawsuit seeks injunctions to halt further violations and civil penalties up to $2,500 per incident. Los Angeles’s action underscores ongoing tensions between digital rental platforms and local authorities over consumer protections in times of crisis, especially as wildfires become more frequent and severe.