Airbnb and racial discrimination by hosts

The NY Times follows the story: Airbnb Vows to Fight Racism, but Its Users Can’t Sue to Prompt Fairness

"SAN FRANCISCO — Brian Chesky, chief executive of Airbnb, made a vow this month to root out bigotry from his business.

His online room-sharing company has recently been grappling with claims of discrimination, with several Airbnb users sharing stories on social media about how they were supposedly denied a booking because of their race. The issue came into the open in December, when a working paper by Harvard University researchers found it was harder for guests with African-American-sounding names to rent rooms through the site.

“This is a huge issue for us,” Mr. Chesky said at a company event in San Francisco in early June. “We will be revisiting the design of our site from end to end to see how we can create a more inclusive platform.”

But even as Mr. Chesky promised to stamp out racism from Airbnb, the company’s class-action litigation policy makes it tough — if not impossible — for customers to push the start-up to make any substantive changes on the issue. Airbnb requires that people agree to waive their right to sue, or to join in any class-action lawsuit or class-action arbitration, to use the service.

That clause, known as a class-action waiver, crops up whenever someone logs into Airbnb’s site. In March, the company updated its terms of service for new users, partly tohighlight that clause. Last month, Airbnb users were unable to log in and use their accounts until they agreed to the updated terms, including the class-action waiver language.

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"For Airbnb, an effective response to discrimination claims is needed to blunt any fallout on its business. The company, valued at about $25 billion, has hosts in more than 34,000 cities and 191 countries and is positioning itself as an alternative to hotels. Airbnb recently raised $1 billion in debt to help finance its growth, according to a person familiar with the deal who spoke on the condition of anonymity because the transaction is not public. The credit facility wasreported earlier by Bloomberg.

Airbnb’s expansion depends partly on whether people of different nationalities and ethnicities feel welcomed to the platform in the same nondiscriminatory way that they are welcomed at international hotel chains. Two rival room-sharing services, Innclusive and Noirbnb, are now marketing themselves as services that provide inclusive and safe short-term rentals for people of any race or ethnicity.

Ms. Murphy, the Airbnb adviser, said the company recognized that eliminating discrimination was in its best interests. She said Airbnb’s relative youth — the company was founded in 2008 — meant it could deal with the issue in a more agile way than companies with entrenched cultures that may have needed the pressure of litigation to do the right thing.

“Airbnb is part of a new area of commerce, and the conditions for transactions are still developing,” she said. “That’s why it’s important to get it right.”