A vacation rental property owner has filed a class action lawsuit against HomeAway over the online portal's pricing tactics, after the company changed its fees and policies last month.
In the case, owner Ivan Arnold of the Los Angeles-area says he has been a customer of the Austin-based company since 2013. (He rents out a home in Palm Springs to offset the cost of ownership.) Arnold says he entered into his current year-long subscription contract of $1,848 without him and other consumers being made aware of coming fee changes.
The suit alleges that tens of thousands of consumers experienced a loss because they might have otherwise purchased a cheaper service from HomeAway or a rival vacation rental marketplace if they had been aware of the fee changes in advance. It claims that owners face lost bookings because HomeAway’s new service fee to travelers has led to owners receiving fewer bookings than they would have received otherwise.
For years, HomeAway's brands have charged yearly subscription fees for the right to list homes for rent. That policy changed in February, when the company, recently acquired by Expedia Inc, rolled out new service fees to travelers, which range from 4% to 10% of the price of the rental.
Uncertain path
Unlike other suits, class actions in the US need a judge to certify them before they can go ahead. The bar for being certified is typically high. So it is uncertain if HomeAway will actually face this class action in court.
Since 2011, it's been allowed for companies to add language to their terms of service that thwart most class actions. It's unclear if this is the case for HomeAway's agreements.
Austin-based litigators Fritz, Byrne, Head & Fitzpatrick filed the suit on Arnold's behalf.
The suit says:
"The contracts that Plaintiff and other owners entered into with HomeAway specified that the charges in effect at the time Plaintiff and other owners entered into their subscription agreements with HomeAway would govern throughout the term of those agreements (i.e., for one year).
To quote: “For subscription listings, the rates in effect at the time of the member’s next subscription renewal, new listing or a member’s upgrade or any other additional or new order of any product or service will govern for such renewal or other order.”
Meaning that, since the charges in effect at the time Plaintiff and other owners entered into their subscription agreements did not include fees to travelers, HomeAway was contractually prohibited from charging fees to travelers during the year those contracts were in effect."
The suit makes much of statements made by HomeAway CEO Brian Sharples allegedly saying, “We will also by the way continue to be free for travelers.”
The suit also makes much of a recently resurfaced video of Sharples speaking at a gathering of VBRO owners.)
The context of the Sharples quote was:
"We are going to be free to travelers. TripAdvisorand Airbnb have chosen to charge big fees to travelers. Well, we’re going to have a pretty sizeable marketing budget in the next few years. And we’re going to be letting everybody know, when you come to our platform and you don’t pay a fee and we think that’s a big deal."
It remains unclear if owners who want pro-rated refunds of their subscriptions due to the policy change can receive ones. The company's terms of service around refund requests leaves that vague, saying "Generally, no refunds are available unless a member qualifies for a refund under any guarantee program we may have in effect."
HomeAway did not return a request for comment on a few hours' deadline notice. But we will update this story if we hear from the company.
290+ comments: HomeAway tweaks its rental commissions, adds traveler fee
Yesterday's update: HomeAway’s new fee sparks some anger the company tries to quell