Airbnb, Forced Arbitration And An Evolving Privacy Policy That Shares More Than Homes

When Airbnb last week sent a note out about some modifications to its terms of service, few probably bothered to read through the reams of fine print to see precisely what had changed. But if you’re one of the 60 million-plus people who use the home-sharing service, you should probably pay attention, especially if you care about who Airbnb shares your data with, how deeply it peers into your personal history and what legal recourse you have if a gaggle of backpackers track mud all over your priceless Persian rug.

Data collection practices, criminal background checks and forced arbitration policies were among the areas of Airbnb’s fine print that were tweaked as part of the San Francisco housing rental site’s updated terms of service. The changes — announced last week and taking effect in May — bolster Airbnb’s ability to compel users to forfeit key legal rights, some of which are at issue in an ongoing court battle. They also refine its ability to marshal users’ personal information for deep background checks, targeted ads and other undisclosed business enterprises.

The revisions and additions spotlight the old idiom that the devil is in the details. But in the age of turgid, arcane user agreements, it’s a devil few users ever see, because they are buried in fine print that most users ignore.

“When you click that little box, you are giving away a great deal of rights,” said Cullen Hoback, who directed the 2013 documentary “Terms and Conditions May Apply,” which looked at the implications of user agreements. “The Constitution doesn’t apply. The companies are writing their own laws and nobody is negotiating on behalf of the user, so you are entering uncharted territory. They are writing laws that entirely protect them and take everything that they possibly can from you.”

Yet with more and more of life being conducted online, user agreements have become an increasingly significant force for shaping everything from commerce to property rights to legal disputes — and that shift has brought controversy from all corners of the internet. Facebook, for instance, has faced criticism about its use of user information for research experiments and its claims to be able to use users’ personal data in perpetuity. Instagram sparked fears in 2012 over rule changes that users feared meant it was claiming a right to sell users’ photographs. That same year, Google’s launch of its file storage and sharing site, Google Drive, was plagued by questions about whether it was claiming ownership rights of users’ files.

In the case of Airbnb, most of its recent updates strengthen, clarify or expand policies that had already been in place, and the company said it has made its best effort to be transparent about its latest round of changes. That includes a landing page on its website with a bulleted list of what was updated.

“In the past year Airbnb’s community has grown significantly, so we updated our Terms of Service and Privacy Policy, to better serve our customers,” the company told International Business Times in an emailed statement. “Airbnb's people to people platform provides transformative experiences by bringing folks together to share their lives. Airbnb expands the economic pie for ordinary people and gives millions of everyday people the chance to travel to cities and neighborhoods they may have missed by democratizing travel, allowing anyone to belong anywhere."

Sharing Homes, and Then Some

The new changes will affect the company’s more than 60 million users in myriad ways, and chief among them are changes in how Airbnb may use personal data. One set of provisions says the company may share personal information — including “sensitive information” — with its affiliates and other entities “to serve targeted ads,” for “everyday business purposes” and “to jointly market products or services to you with other financial Third Parties.”

In recent years, some users have recounted horror stories of their experiences with renting through Airbnb — including allegations that they were victims of crimes. In light of that, the updated terms place much greater emphasis on Airbnb’s ability to cross-reference users’ personal information with other public and nonpublic databases and engage in background checks. Specifically, the site added that it may also obtain reports from “public records of criminal convictions.”

But consumers may not even know these checks are being performed. The agreement says that “you agree and authorize us to use your personal information, such as your full name and date of birth, to obtain such reports, including from Airbnb's vendors” and that it may do so “without further notifying you.” However, the company told IBT that if its check of a user discovered negative information, it would let the user know, if such disclosure was required by local laws.

“It looks like Airbnb is reserving the right to use information from nonpublic databases, information on such things as credit scores, criminal history and other background info about people,” ACLU staff attorney Esha Bandhari told IBT. “One of the concerns that raises is people aren’t entirely aware of what information about themselves is being collected, because they may not have access to those databases, and they may not have an ability to correct faulty information. They also may have no real understanding of how Airbnb is aggregating and using that info in a way that affects their experience.”

The use of such databases has emerged as a legal flashpoint, most recently with a Supreme Court case in which a plaintiff is suing an internet data vendor for collecting inaccurate information about him. The case spotlights what watchdog groups say is a situation in which consumers have no straightforward way to fix or dispute incorrect information about them, even as other businesses may be using that data to restrict their access to credit and other business services.

Airbnb did not reveal what specific databases it currently uses or may use in the future. A spokesperson said the company does not use credit reports but instead uses consumer reports that do not include financial information.

Privacy watchdog groups told IBT that questions surrounding the company’s use of such third-party databases are particularly acute, because it is involved in housing — a human necessity considered so vital that it is protected by special civil rights laws aimed at preventing discrimination.

Airbnb is not unfamiliar with such issues. Last year it faced a firestorm over a study from Harvard researchers, which found that users with African American-sounding names had more difficulty booking lodging through the site than users with white-sounding names. Depending on what databases a company like Airbnb is using and whether it ends up using data to rank or promote certain users over other users, Bandhari says the system could inadvertently discriminate against certain users. The company told IBT it does not use the information to rank users.

“To the extent that you now have factors like credit score, neighborhood, criminal history that may serve as a proxy for race, that may have systematic impact on who is able to use Airbnb successfully,” she told IBT, adding that being transparent about the use of such data is critical.

In announcing its updated terms of service, Airbnb has been more transparent than some companies. Instead of simply making the change to the user agreement without warning, it is preserving a version of its current terms of service so that users can compare them. The company also added a provision declaring that users residing in the European Union “are entitled to see and challenge any information that Third Parties may provide to us” if, among other things, the company makes “a decision which has legal consequences for you or which significantly affects you.” The terms of service do not say those protections extend to users residing in other countries.

While acknowledging the legitimacy of concerns about not being able to challenge inaccurate data, Guatam Hans of the Center for Democracy and Technology cautioned against assuming that Airbnb and other companies are actually using all the rights they outline in their terms of service.

“A lot of this language is phrased in terms of ‘can’ and ‘may’ and not in terms of ‘do’ — and that’s an important distinction,” he told IBT. “Companies will often reserve the right to do certain things and not exercise that right. That’s because these documents are compliance documents first and foremost. A lot of lawyers want to reserve rights to use in the future and they may not actually ever exercise those rights, but they just want the option to do that.”

The Arbitration Trap

In at least one area where Airbnb tweaked its new terms of service, there is concrete evidence that the company is focusing more intently on exercising its rights — namely, what it says is the right to avoid collective legal action when things go wrong.

Airbnb agreements employ the controversial but increasingly common practice of forced arbitration, meaning users who sign up for the service essentially waive their rights to a trial by jury, or to participate in a class-action lawsuit. In the event of a dispute with Airbnb, users agree to resolve said dispute through binding arbitration, not the court system.

The latest version of Airbnb’s user agreement appears to have strengthened that policy in favor of Airbnb, adding the term “class-wide arbitration” to the list of rights that users sign away. It’s a minor change in wording, but one that could bolster Airbnb’s position when it inevitably convinces judges to toss class-action lawsuits against it and instead compel plaintiffs into individual arbitration.

The goal, of course, is to prevent disgruntled Airbnb users from addressing their grievances collectively. And even outside a courtroom setting, that can happen. According to the American Arbitration Association, “class-wide arbitration” is permissible in disputes if an agreement or contract does not expressly prohibit it. What’s more, the decision to allow class-wide certification could be left to the whims of a single arbitrator, at which point a company’s arbitration clause would have pretty much backfired. This sometimes happens when contracts have murky language or are silent on the issue, but with its newly clarified ban on “class-wide arbitration,” Airbnb is leaving nothing to chance.

In fact, Airbnb is currently fighting a federal court case that hinges on this very issue. In February, two Airbnb users in New York — Francesco Plazza and Sylvie Naude — filed a lawsuit against the company accusing it of acting as an unlicensed real estate broker. Because the lawsuit is a proposed class action, it could have serious implications for how Airbnb operates in the country’s largest real estate market. But first it has to pass muster with a judge.

Airbnb, not surprisingly, wants the lawsuit to be thrown out of court in favor of binding arbitration. The merits of the case aside, a lawyer for the home-sharing giant wrote a letter to the U.S. district judge presiding over the case on March 28 (three days before it posted its updated its terms of service, though Airbnb says the timing is a coincidence). In the letter, Airbnb’s lawyer insisted that the case should not be permitted to go forward because Plazza and Naude agreed to binding arbitration when they agreed to Airbnb’s terms of service.

“Plaintiffs should not be able to avoid the terms of that agreement, particularly given that they each as Hosts benefited financially from their use of Airbnb’s platform,” wrote Roberta A. Kaplan, a lawyer with New York City law firm Paul, Weiss.

On it’s face, this seems like an open-and-shut argument: If you agree to Airbnb’s terms, you play by its rules. Case closed.

Not so fast, says Jeffrey M. Norton, a lawyer for Newman Ferrara in New York who is representing Plazza and Naude. An arbitration clause, he says, is only enforceable if someone actually agrees to it in a meaningful way. Norton said his clients joined Airbnb years ago and through “an entirely different process” than the one Airbnb currently uses. As such, Airbnb can’t establish that Plazza and Naude ever agreed to the current terms, let alone the arbitration clause.

“What we’re arguing is that their terms of service were not agreed to,” Norton told IBT. “The requirements for a legally binding terms-of-service agreement are relatively clear. The sign-in procedures have to manifest clearly the user’s assent to their terms, and we don’t have that in this case.”

It’s a nuance that underscores an important fact of online life: Not all terms-of-service agreements are created equal. From a legal standpoint this is a critically important detail, and one that could affect whether the lawsuit and others like it ever get past a judge. Norton said two distinct types of online agreements can affect whether they are enforceable. “Clickwrap agreements” require users to actively click an “I Agree” box before they can agree to the terms, while “browsewrap” agreements are generally just accessible via a hyperlink at the bottom of a website. Courts have typically found “clickwrap” agreements to be more enforceable.

Meanwhile, Norton is arguing that Airbnb’s sign-in page (which gives users the option of signing in with Google, Facebook or via an email address) was not enough to manifest the plaintiffs’ assent. “What it comes down to is, what are the earmarks of a binding terms-of-service agreement, and how you sign on to that?” Norton said.

All of which should stand as a cautionary tale for anyone who has ever visited a page or clicked “agree” without reading the fine print — which is to say almost everyone. How you agree can be just as important as what you’re agreeing to, especially when companies inevitably alter the deal.

This story has been updated to reflect additional information from Airbnb. While the company first told IBT it may pull reports from credit agencies, it now says it does not use credit reports but instead uses consumer reports that do not include users’ financial information.