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Airbnb's latest crisis: Homes used as brothels

Airbnb is becoming more like a hotel chain every day, and like a hotel chain, has to deal with serious issues. Lately, those issues have included prostitution.

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Sex workers and their clients are no strangers to hotels, motels, and Holiday Inns, but hospitality staff tend to know what illicit activity looks like and how to stop it. Airbnb hosts aren’t usually around for their guests’ stays, and can come home to pretty nasty surprises. The New York Post reported this week that prostitution rings are using Airbnb in New York to conduct their work on the sly, and hosts are only finding out when something goes terribly wrong.

One New York host didn’t realize her guest was a prostitute until the cops called her: The guest had been attacked by a client over the price of her services.

The Post report follows just weeks after an Airbnb host in New York discovered his apartment was being used for a “XXX FREAK FEST” (which is basically what it sounds like). That incident made headlines, and Airbnb had to shell out cash to help the host replace his belongings.

Airbnb really doesn’t need more public relations disasters in New York. The company is struggling to prove its legitimacy and get state Attorney General Eric Schneiderman off its case. Airbnb is currently running afoul of a New York law that bans short-term residential rentals under 30 days. Schneiderman subpoenaed Airbnb for information on its New York hosts, which the company is still fighting.

Airbnb’s fight to change laws, perceptions

Airbnb has had some success gaining acceptance in other cities like Portland, where a new tax category is being created for businesses like Airbnb. But New York has posed many challenges for the company, which is working to change state law so its hosts can pay occupancy taxes. On Monday, the company said those taxes could generate $21 million for state and local governments. Of course, if New York started taxing Airbnb, it would prove Airbnb is a legitimate, legal business. Legitimate businesses have prostitution prevention policies.

Airbnb told the Post that the “entire hospitality industry deals with issues like this, and we have zero tolerance for this activity.” The company has a $1 million insurance policy for every property listing, so if a home is damaged by a rogue guest, Airbnb will cover the replacement and repair costs.

State Sen. Elizabeth Krueger, who penned the short-term residential law that Airbnb is fighting to change, had harsh words for the company on Tuesday.

“While it’s nice that Airbnb spare no expense in compensating hosts who experience disasters like the use of their apartment as a headquarters for a floating brothel, that’s a textbook PR tactic and shouldn’t be mistaken for actual responsibility,” Krueger said in a statement.

Even if Airbnb succeeds in changing the law, many hosts are also violating their leases by subletting without permission from their landlords. Krueger said Airbnb doesn’t do enough to warn hosts that renting their apartments could get them evicted. Airbnb recently updated its terms of service with a warning to hosts that they should check their leases before marketing their apartments on the site.

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