Airbnb must reimburse service fees to tenants of private vacation rentals, according to the Amsterdam Subdistrict Court on March 9, 2020. The court found that Airbnb is a “broker” (in Dutch: “bemiddelaar”) for both the landlord and tenant. This means that by law, Airbnb is not allowed to charge tenants for its platformservices.
The ruling has major implications for Airbnb’s revenue model. And the tenant’s attorneys have already found their own revenue model and set up a new company to also collect claims for other tenants. A class action is also in preparation.
The ruling may also be relevant to other online platforms that charge both buyer and seller.
Through Airbnb’s platform, anyone can rent out their home, apartment, or hotel room. An agreement is made between the tenant and the accommodation provider. Airbnb does not become a party to this agreement.
However, Airbnb does enter into a different agreement with tenants and accommodation providers, subject to its terms and conditions. On the basis of those agreements, Airbnb offers its service:
- Airbnb arranges for the accommodation to be offered through its platform by the host and to be found by the tenant;
- Airbnb facilitates direct contact between the parties after the conclusion of the agreement. Prior to the conclusion of the agreement, Airbnb facilitates communication, but the parties do not have direct contact information of each other;
- The tenant cannot pay the agreed amount directly to the accommodation provider, but first pays the amount to (a payment service provider of) Airbnb. Airbnb then pays the host, but withholds a fee;
- Both parties pay a “service fee” for Airbnb’s platform services.
Why isn’t Airbnb allowed to charge service fees to tenants?
The Amsterdam Subdistrict Court ruled that Section 7:417(4) of the Dutch Civil Code applies in full to Airnb’s service. It follows from that article that tenants may not be charged a fee if:
- The tenant is a consumer;
- There is two-way intermediation (simultaneously for the tenant and the host); and
- It concerns the buying or selling or renting or letting of immovable property.
Airbnb has of course objected to the applicability of these criteria in the proceedings. It also argued that Irish law applied and that the free movement of services precluded the applicability of Section 7:417(4) of the Civil Code. To no avail.
The most relevant considerations for other online platforms concern the assessment of Airbnb’s position as a broker within the meaning of the law.
Why is the ruling also relevant to other online platforms?
Article 7:417(4) of the Civil Code only applies to the buying or selling or renting or letting of immovable property, but the other paragraphs of Article 7:417 of the Civil Code may also apply to other kinds of platforms.
Article 7:417 DCC prohibits the “serving two masters”. The purpose of this is to prevent a conflict of interest when a broker acts simultaneously for a buyer and a seller. This is only allowed if certain conditions are met:
- The content of the acts to be performed by the broker must be so precise that a conflict of interests is excluded (Article 7:417 paragraph 1 of the Civil Code);
- If one of the clients is a consumer, he must give written permission to the broker to also act for the other client. This is not allowed in general terms and conditions (article 7:417 section 2 BW).
If these conditions are not met, then the broker is not allowed to charge a salary to the consumer (if the consumerhas not given permission) or even to either of the parties (if its assignment was not established with sufficient accuracy), as follows from article 7:417 section 3 BW.
When is an online platform a “broker”?
A brokerage agreement exists if an online platform commits to its users to act as an intermediary in concluding agreements.
This threshold is easily overcome.
The agreements must be concluded in name and on behalf of the users. This is the case with most online platforms. They usually stipulate that agreements are concluded between seller and buyer, and that the online platform is not a party to the agreement. You could even call it part of the definition of “online platforms”.
When is an online platform an “electronic bulletin board”?
However, a platform can also be regarded as an “electronic bulletin board”, in which case there is no ” brokerage” within the meaning of the law. Therefore, in the case of an electronic bulletin board, the prohibition of serving two masters does not apply.
In the case of an electronic bulletin board, supply and demand are merely brought together, while a broker plays a more active role. Because the term electronic bulletin board does not have a statutory definition, case law is gradually creating more clarity.
In any case it is necessary that seller and buyer are not shielded from each other by the platform and are therefore free to contact each other outside the platform. It is also important exactly how much influence the platform exerts.
The term “electronic bulletin board” stems from a procedure dating from 2015. In this procedure it was a matter of discussion whether real estate agent Duinzigt was allowed to charge tenants brokerage costs. Duinzigt concluded agreements with landlords to place properties on its website and on the website of Pararius. In order to be able to rent the house, the future tenant had to register with Duinzigt. The Supreme Court ruled that for the qualification as an electronic bulletin board it is important whether the prospective landlord and tenant are shielded from each other and whether or not it is made impossible for them to contact each other directly and without intervention in order to negotiate a tenancy agreement. Duinzigt did shield tenants and landlords from each other.
In July 2019, the District Court of Amsterdam ruled that the Helpling cleaning platform was an ‘employment broker‘ and not an electronic bulletin board because of Helpling’s interference in the manner in which the agreement between the client and the cleaner was concluded.
In May 2018, the District Court of Utrecht (Midden-Nederland) ruled that Hotelspecials.nl (similar to Booking.com) should be regarded a broker. This was because Hotelspecials.nl sets the conditions for the accommodation prices and receives compensation from the accommodation providers.
Booking.com vs. Airbnb: electronic bulletin board vs. broker
In May 2019, the Court of Appeal of Amsterdam considered whether Booking.com should be regarded as an “electronic bulletin board”. Yes, according to the Court. But why not Airbnb?
Court of Amsterdam: Booking.com is an electronic bulletin board
The question that the Court of Appeal of Amsterdam considered in May 2019 was not whether Booking.com was allowed to charge both parties service costs, but whether Booking.com was subject to the Obligation Decree of the Industry Pension Fund for the Travel Industry. Booking.com would fall under that decision if it brokered in the conclusion of agreements in the field of travel. The Court of Appeal ruled that this was not the case.
In particular, the Court of Appeal considered the following to be important:
- Users can book the accommodations outside of Booking.com;
- Booking.com has no influence on prices;
- Booking.com has no influence on the accommodationsor the conditions under which they are offered.
The Court of Appeal found the following not to be relevant:
- The accommodation provider owes a commission;
- An account manager has been appointed who advises the accommodation provider on the presentation of the accommodation;
- In the event of (technical) problems with reservations, the user can call on Booking.com’s customer service;
- That Booking.com sends messages with tourist tips to the guests after the reservation has been made;
- Booking.com requests a lowest price guarantee;
- Booking.com applies a ranking to the search results.
Court of Amsterdam: Airbnb is a broker
In its March 2020 judgment, the Subdistrict Court of Amsterdam compared Airbnb’s services to those of Booking.com.
On Booking.com, contact details of the accommodation are posted and the user is shown who the host is after a search query. This enables contact to be made outside of Booking.com. Airbnb removes any link to the host (for example, from the ad text), so there is no way to contact the host outside of the platform.
With Booking.com, the agreement between the host and the tenant is established immediately. With Airbnb, it’s different. Once an Airbnb user has found his accommodation and indicates through Airbnb that he wants to rent, Airbnb passes on the guest’s details to the host, and the host is notified within their account environment. An agreement between a host and a guest is not established until the host agrees to the request.
In addition, the court considers the following to be important:
- Airbnb influences the rentals and ultimately sets the total price;
- Payment of the rent is made through Airbnb. The guest cannot pay the agreed rent directly to the accommodation provider, but first pays the amount to (the payment service provider of) Airbnb. Airbnb then pays the host;
- Airbnb does not show all accommodations to users who are looking for an accommodation, but makes a selection.
Many online platforms act for both sellers and buyers, landlords and tenants, cleaners and clients, and charge both parties a fee. Whether or not this is allowed depends in the first place on whether brokerage is involved.
If not, no problem. If so, the next question is whether the electronic bulletin board exception applies.
If this is not the case, for example because users cannot contact each other directly or because the platform has too much influence, then the next question is whether the obligations of the platform have been defined sufficiently accurate. If there is doubt about this and there is therefore a risk of a conflict of interest, the platform is not entitled to a fee. If consumers are not asked for written consent for multi-sided brokerage, no compensation may be charged to the consumers.