About two months after a harrowing report alleging that Airbnb has used settlements and confidential arbitration in an attempt to shield cases of violence and sexual assault perpetrated against its guests and hosts from public view, the company says it is updating its terms of service.
The travel rental platform said Aug. 13 that it would no longer compel sexual assault claims from Airbnb hosts or guests against the company into arbitration, a form of confidential dispute resolution. Arbitration is widely used by companies across industries, but has come under attack for its secretive nature, particularly since the rise of the #MeToo movement. Under Airbnb’s new policy, victims of alleged sexual assault will have the option of taking their claims to court, which would make the dispute public.
Airbnb said in a statement about its new policy that instances of sexual assault are “extremely rare” on the platform and that the policy update is a codification of how it’s already been handling these cases since January 2019. The company “has not asked a court to force any of the very few cases involving sexual assault or sexual harassment claims by hosts or guests into arbitration” since that time and stopped compelling such claims among its own employees go to arbitration in late 2018, it said. “We believe that survivors should be able to bring claims in whatever forum is best for them,” Airbnb said. The company declined to make a representative available for an interview.
“I think that it’s going to be helpful for Airbnb to have this kind of transparency and accountability, because if you’re operating in the shadows, you don’t have a whole lot of incentive to improve your game,” says Enrico Schaefer, an attorney whose firm, Traverse Legal, is currently representing Airbnb hosts or guests in about 600 arbitration cases against the company (none of which involve sexual assault or harassment).
The changes to Airbnb’s safety policy follow a Bloomberg Businessweek investigation published in mid-June, which claimed that Airbnb was spending about $50 million in payouts each year to hosts and guests in legal settlements and damages to homes. The report, which was based on documents and more than 50 interviews with current and former staff members, said that Airbnb reportedly handles thousands of allegations of sexual assault annually from its users, many of which are regarding rape. An Airbnb spokesman didn’t respond to multiple requests for comment on the investigation.
Airbnb has had at least 284 consumer cases closed against the company via arbitration over the last five years—121 of which were settled, according to records from the American Arbitration Association that were reviewed by Fortune (Airbnb exclusively uses AAA for disputes). The claims made in those cases are unknown; it’s not clear how many—if any—involved sexual assault.
Airbnb spokesman Ben Breit told Fortune that pre-pandemic, around 50 arbitration claims were filed each year, the majority of which are small claims “related to comparatively minor issues like cancellations or small property damage claims.” For any settlements regarding sexual assault, survivors “can speak freely about their experiences” after settling with the company.
Companies are under increasing pressure to end forced arbitration agreements in contracts since the rise of the #MeToo movement. Some research has found that arbitration cases tend to favor employers, but most of the controversy lies in its closed-door nature, as case documents are available only to the parties involved and not to the general public. Opponents of forced arbitration say that it can slow change by hiding problems and stifle debate over how a company should be addressing sexual assault. While some victims may prefer to arbitrate because of the privacy involved or because it can be more affordable, hundreds of companies don’t give them a say in the matter.
A few states, including New York and Vermont, have moved to put limits on their arbitration laws in recent years, though a federal law known as the Federal Arbitration Act has hindered some of those attempts. More and more corporations are voluntarily eliminating their own forced arbitration clauses. In some cases, changes have been made only after a high-profile scandal or an aggressive push from employees or advocates.
“Some companies install new inclusive policies for the greater good, and some do it because they’re trying to correct some historical issues. Either way, I’ll take it, because in the end we move forward,” says Kathleen Zemaitis, founder of a diversity and inclusion consulting agency.
For Airbnb, this is a step in the right direction, according to Schaefer, and may lead the company to improve its systems, processes, and staffing to help reduce the risk of sexual assault happening in the first place.
“The reality is, with all the reservations that are made on the platform, there is a really good track record of trust and safety,” he says. “But that doesn’t mean we shouldn’t do better and that Airbnb shouldn’t do better.”
Airbnb has a policy against sexual assault and harassment for guests and hosts that use the platform, and it has a team of approximately 100 people to address incidents after they take place, according to the company. Airbnb said it expects to formally update the terms of its arbitration policies in the fall. “Our goal is to make Airbnb the safest and most trusted way to travel. Paramount to building trust is doing the right thing in the rare instances where things go wrong,” Airbnb said.
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