Elizabeth Warren, Brian Schatz and Dianne Feinstein call for FTC Airbnb report

Democratic Senators Are Now Urging the Government to Scrutinize Airbnb

Democratic Senators Are Now Urging the Government to Scrutinize Airbnb

Moneybox
A blog about business and economics.
July 13 2016 4:16 PM

Democratic Senators Are Now Urging the Government to Scrutinize Airbnb

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Brian Chesky, CEO of Airbnb, at the World Economic Forum in Davos.

Denis Balibouse/Reuters

A trio of Democratic U.S. senators wrote to the Federal Trade Commission on Wednesday morning to request a study of how Airbnb and similar companies are easing the conversion of residential dwellings into unregulated hotel rooms.

Henry Grabar Henry Grabar

Henry Grabar is a staff writer for Slate’s Moneybox.

The letter, signed by sens. Brian Schatz of Hawaii, Dianne Feinstein of California, and Elizabeth Warren of Massachusetts and addressed to FTC Chairwoman Edith Ramirez, expresses general worry about the short-term rental industry’s issues with discrimination and consumer safety, as well as its skirmishes with local governments. But the main targets here are “commercial operators” renting out entire residential units long-term, or even multiple units.

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“We are concerned that short-term rentals may be exacerbating housing shortages and driving up the cost of housing in our communities,” the letter reads. It goes on to cite a 2014 report by New York Attorney General Eric Schneiderman, which drew attention to the presence of professional, full-time hosts on Airbnb in New York City. The idea that home-sharing might make it harder for locals to find housing has also gained currency in San Francisco, which is embroiled in a legal battle with Airbnb. Yesterday, Hawaii Gov. David Ige vetoed the so-called Airbnb bill, which would have allowed Airbnb to collect taxes from hosts on the state’s behalf. Ige said it would encourage the illegal vacation rental market at a time of great stress for the state’s affordable housing supply.

Needless to say, all this runs counter to the San Francisco start-up’s line that renting a spare room—or one’s entire dwelling—is a harmless way for folks to pay the rent.

What does the letter mean for short-term rental companies, and the hosts and guests who use them? If it resulted in an FTC report, that could provide an authoritative dataset to guide local pols as they attempt to revise laws about home-sharing.

Perhaps more importantly, though, the letter indicates that the thorny legal issues raised by “online marketplace” companies—cab companies with no cars and hotel companies with no rooms—are making their way to Washington. In September, Virginia Sen. Mark Warner, also a Democrat, asked various cabinet secretaries to generate better information about American workers in the on-demand economy. “No one else in Washington is talking about this yet,” he said at the time.

That's starting to change. If there’s one thing that the lawsuits brought by and against Airbnb have demonstrated, it’s that federal laws like the Civil Rights Act and Communications Decency Act are a poor fit for regulating modern internet companies. Attention in the senate suggests there might be interest in coming up with something new.

Update, July 13, 5:20 p.m.: Chris Lehane, head of global policy and communications for Airbnb, has issued a statement in response:

"The vast majority of our hosts in Massachusetts, California, Hawaii and across the county are middle class people who depend on home sharing as a way to address economic inequality. According to a study conducted by former National Economic Council Director Gene Sperling, the typical Airbnb host makes approximately $7,530 by sharing their home 66 days per year. And we recently released a study showing that in ten of some of the largest cities in the United States, 51 percent of our hosts depend on the on the extra money they make from home sharing to make ends meet and 13 percent have avoided foreclosure or eviction because of homesharing. We welcome any opportunity to work with lawmakers and regulators who want to learn more about how home sharing helps the middle class address the issue of economic inequality."