Tuesday, December 17, 2019
An Airbnb scam exposed, and why Silicon Valley’s culture of growth-at-all-costs means safeguards are an afterthought.
Links to resources discussed:
Arielle Duhaime-Ross (@adrs), host and lead reporter of Reset
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So there's a bait and switch scam on Airbnb. And here's how it works.
You book a place that looks pretty nice and pretty cheap. And then, about five minutes before, check in, you get a call about an emergency.
(00:00:55): Flooded. The air conditioner is broken. Something in saying this happened. You don't want to stay here.
(00:01:01): But luckily he's there to save the day with a nicer, bigger place.
(00:01:08): You're gonna be disoriented in a new city and just decide toe do the easiest thing, which is to trust this person that you don't know.
(00:01:18): Get it there. It's just disgusting, but you have to request a refund before check in. So see late at that point to ask for a refund through their policies as written. And then this happened to you. This did happen to me and many other people of it that way.
(00:01:42): I'm Ariel Dream Ross. This is recent.
(00:01:47): Today on the show. Some Airbnb customers are getting scammed in a big way.
(00:01:54): Ali Conti is the reporter who uncovered the con and wrote about it for vice. She got scammed herself. In September, while on vacation in Chicago.
(00:02:04): Ali and her friends spent $1200 to stay at an apartment. But just as they were about to check in, the host told her the place was flooded and suggested that she and her party check in tow, a substitute that he also managed.
(00:02:18): It turned out to be pretty dingy, and then he kicked her out after just two days, forcing them to find a hotel at the last minute, and he never gave her refund, so Allie started to look into him. She found that the same people who scammed her managed Airbnb listings in eight cities across the country. I was able to find about 100 listings that I would say are related to this scam. But since I started reporting on this. I have received hundreds and hundreds of e mails from people who have had really similar experiences, and this is global, so I think it's actually.
(00:02:55): Fairly common. Okay, what were some of the stories that you heard from other people who also got scammed, actually remarkably similar about to check into a place, have your luggage in hand. You got a call about an emergency. You know, you have a choice between taking this other place or spending half of your vacation trying to track down.
(00:03:14): Alternate lodgings. So people just kind of roll with it and they figure.
(00:03:18): Oh, I'll deal with it, want to get home, At which point it's too late to get a refund, and then they just kind of give up. Are these scammers making a lot of money off of this.
(00:03:27): I think so. Because they're not just running one property rights. The move. They have 10 properties in the city and they're working in eight different cities.
(00:03:35): Um, charging, you know, hundreds of dollars a night. So I mean, that's like, hundreds of thousands of dollars. Seemingly. Did you ever find out anything about the person behind this scam or the the organization behind it Sure actually thought it was gonna be a much bigger organization than it was. And it's essentially two dudes.
(00:03:58): They ran a like a short term rental company called Abbott Pacific.
(00:04:04): I went through a bunch of property records corporation records and actually found this guy's name. And then I looked him up on instagram and social media and stuff, and he described himself s, you know, a real estate investor operating in all of the city is that these properties were in.
(00:04:20): I felt pretty confident that it was him, uh.
(00:04:23): Called up the number associated with his business.
(00:04:27): And after I explained that I was a reporter working on this story, the website went down. His LinkedIn changed. Uh, he started changing around all the properties and jacking. Some of them have to be $10,000 a night so that, you know, no one would be booking them. So it was a pretty clear indication of guilt. I would say.
(00:04:44): That's what I was like. Oh, this is This has gotta be the guy. Did you ever talk to him? I talked to somebody who claimed his name was Patrick the scammers name was not Patrick. So.
(00:04:54): He said that he just answered phones for the company.
(00:04:57): That he would try to put me in touch with the scammers.
(00:05:00): Um, of course he wasn't calling his cameras, but I'm calling the scammers. Uh, and yeah, you just claim to be interested in what I was writing and wanting to know more, more so than I think is, uh, realistic for somebody who's just like the receptionist at a company.
(00:05:16): So I can't really say that I talked to the guy, but, um seems so more likely that I think you think maybe maybe use him. Yeah, it could be like a Donald Trump thing where you pretend to be your own secretary. That was kind of.
(00:05:33): Do you think that it's only these two guys or other other people who are also doing this on Airbnb? I mean, I've heard from people who've emailed me, saying that this was something that happened to them and in Asia were in Europe. And I know these guys aren't They don't have that kind of global reach, right? So this might just be like a common formula that.
(00:05:53): No opportunistic people have decided works.
(00:06:01): So you wrote this article. How did Airbnb respond to your reporting? So I e mailed them a list of questions on October 3rd that I thought were pretty basic and that they should know the answers to like, it doesn't seem like they would need to do much like digging or preparing to answer questions about, you know, how are people verified on Airbnb? That seems like something anyone who works there should know the answer to.
(00:06:24): Apparently not. Um, all these scam profiles were listed as having been verified by government i d. I wanted to know how that's possible. I want to know, you know, when people give their phone number, do you check to see if it's a Google member or like actually something that's traceable to a human.
(00:06:41): That kind of stuff And I still haven't gotten real really any answers.
(00:06:48): Ali says that after her story was published, the FBI contacted her to investigate. Six days later, Airbnb CEO Brian Chesky appeared on stage with New York Times columnist Andrew Ross Sorkin.
(00:07:00): Jetski announced a slew of new measures meant to improve trust on the platform, including changes to the company's refund policy.
(00:07:08): He also promised that all seven million listings on Airbnb is platform would be verified by the end of 2020.
(00:07:16): We will make sure that 100% of hosts in 100% of listings will be reviewed by the end of next year, with the intention of having 100% of the things on your beat being verified, you say verified. You mean verified by the company, not by a star system of users. It will be essentially a combination of the company and the community. So we're gonna use technology. We're going to use guest. We're gonna basically get a coffin and score. But we're gonna make sure that we can stand behind every single listing every single host to make sure that every single listing is accurate. The information's accurate. The photos are what you say they are. The address is air accurate. They meet minimum standards. They need basic safety protocol. And the host is who they say they are. You know that what the identity is, I'd be.
(00:08:02): Reluctant to me too.
(00:08:04): Credulous of this like it actually seems really impossible. I mean, I don't know. I think it's harder to go backwards and tryto police stuff and put like regulatory measures in place. Then it would have been to maybe have built that in from the start. So it will be interesting to see you know, how they pull that off if they pull it off.
(00:08:25): It's also interesting because presumably you are not the first customer to get in touch with Airbnb and say, Hey, I think there's a scam here. But clearly what this shows in terms of air being these responses that it takes an article that goes viral.
(00:08:40): For a response of this kind of this nature to actually take place. Yeah, that's part of my reporting. I interviewed other people who had left bad reviews for for these hosts and ask them to send me their correspondence with Airbnb. And they said, This is a scam.
(00:08:57): And nothing changed. So I think it took a really public.
(00:09:02): You know, Gaff for them to realize they had.
(00:09:06): You know, huge issue on their hands that needed addressing. Did you ever get your money back? I did.
(00:09:12): You did. You did? After the article came out? Yeah. Wow. Yeah. Then I asked, Do you think it's Ah a reasonable.
(00:09:19): You know, amount of effort to have to.
(00:09:21): Exert to write a 6000 word article in order to get a.
(00:09:24): Refund from your company. Like, I think that that's a little unreasonable.
(00:09:32): Didn't really get.
(00:09:33): A super great answer to that, but apparently that is what it takes. I don't know.
(00:09:43): We reached out to Airbnb for comment. A spokesperson said that the company had removed all of the profiles associated with Allie Scammer and that if Ali has found additional profiles, it'll remove those two.
(00:09:55): The scam that Alley discovered is actually just one of the scandals Airbnb is dealing with right now.
(00:10:02): After the break, how these issues could have been prevented and why they weren't.
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(00:11:29): Mike Isaac, Your a technology reporter at The New York Times, and you just came out with a book about uber, which is perfect because uber like Airbnb is an app that connects customers to people who own a thing like a car or an apartment that they can share. So, Mike, could you walk us through the last couple of weeks for Airbnb.
(00:11:48): Get? I think it's just been a series of total press PR nightmares for Airbnb the past few weeks. They had this really awful tragedy happened in this community, called a Renda in the Northern California, where folks had rented out an Airbnb house to basically use it as a party house for Halloween. And then, Ah, some really awful shootings happen. And just, you know, people got killed over over what should have been, like a fun night.
(00:12:18): Yeah, I got to say it's been Ah, tough. Couple weeks for Airbnb. How has the company responded? I mean, look.
(00:12:25): They're doing these standard really any corporation thing. We're looking into this. We're taking this seriously. Ah, we guarantee we're gonna sort of police are platform a lot better and and make sure are in response to the vice story there. Said they're going to start like, you know, verifying each property and making sure what is advertised is the correct thing that you're gonna get. But, you know, I mean, it's it's they're doing what they can, but, you know, I see it is kind of a little bit of lip service.
(00:13:01): So Brian Chesky, Airbnb CEO, recently said in an interview with Cara Swisher that his company has been slow to implement strong verification policies.
(00:13:11): We think that we're making up for lost time, and if I could have done all over again, I would have done a lot more sooner. I think that's one of the lessons here is that you know, when you grow up really fast, you sometimes fall behind on. I think a lesson of all of us is.
(00:13:25): We've been a little either wishful and are thinking or naive in not being imagine enough about how the platform could be used in ways we didn't intend it. We have to use more of imagination, and we have to be bolder.
(00:13:42): I think that's kind of a head fake, honestly, like part of the whole philosophy of becoming a platform. And you know, Airbnb is, if not the largest, in one of the largest platforms for, you know, home sharing and renting your place in the world is expanding as fast as possible. And that means just getting people to sign up in, list their houses or apartments or whatever. And I think by design those verifications and checks and the process or not gonna be built in from the beginning, just because you have tohave what's called liquidity on the platform, you have to give people a CZ much election as possible. And I think the way that technologists view it is some subsection of our properties are always going to be, you know, false or at least not properly vetted. And and that's the sort of percentage that our platform is willing to deal with in order to make this.
(00:14:34): To make this work in the long run. So I would argue that it's kind of built by design that way initially. And then, you know, later on, once you get to a big enough scale than they could say, Oh, we're going to start, you know, doing the proper due diligence to make everyone safe, cond happy.
(00:14:49): So in some ways, these policies that would be designed to keep people safe to make sure that there's a very low percentage of scams on the platform, they cost friction, right? They stop people from signing up there, a barrier to entry. And companies like Airbnb don't really like that.
(00:15:08): 100%. I think that all of these they're kind of like, very interchangeable. You know what Airbnb might have said. You know, we could have had better vetting policies upfront, but that's the same as Uber, which has gone through this process of background checks for drivers and and making it harder for people to sign up for the platform if they didn't have identity verification. But that'll comes later, once they get to the scale that they are. You know, early on, Uber was just kind of taking as many bodies, whether his writers or drivers on the platform is possible. Justus Airbnb was trying to do. And then I think, honestly, they're like software corollaries to this To you could look at YouTube in its earliest days. All they wanted was just getting as much video content on the platform as possible to grow. And that included, you know, copyrighted material is sort of ripped off or was called free booted material from other networks. And and that's just I think that's just the nature of being a platform. You have to get big before you can police, you're content. And then, you know, I would also argue that a TTE the same time, it kind of becomes impossible to properly police that once you get that big. So it's kind of a Catch 22.
(00:16:19): What is it about that culture that these companies respond on Lee after something bad happens and a reporter writes about it is This is Silicon Valley thing.
(00:16:27): Yeah, This is why I take all of these.
(00:16:30): You know, we're very concerned statements with a real grain of salt because everyone who's building these platforms knows exactly what they're doing. Ah, and sort of by design. This is how it was meant to scale. And I mean, I think it's fair to argue that you don't know exactly how the platforms are gonna be exploited because you know, criminals or thieves or whatever are very creative. And and we're finding new ways that, you know, let's say Facebook is being manipulated every day, and it's hard to really predict how your platform is gonna be used. But that said, I think there's an acceptable amount of risk built into building any of these things in the first place. And it's really about getting getting to scale and doing that as quickly as possible for before some other competitors beat you to it.
(00:17:14): I feel like this is a thing that we just understand about these companies that they want to get as biggest possible and as quickly as possible.
(00:17:21): Why, though, is it so important for these companies to reach scale? Yeah, I mean.
(00:17:27): In part, Um, there's the advantage of what's called a network effect. Which means like the bigger you get, the more your platform sort of reinforces its own entrenched, you know, incumbency. Or if.
(00:17:39): You're the dominant force, basically.
(00:17:41): Exactly. Yeah, and so it's, I mean, that's Facebook. Facebook greatly benefits from that, Um, more. The more people that use it, the more people are gonna continue using it basically over time. And so part of that is maybe the nature of of the business itself. And then I can't imagine most of the folks in Silicon Valley wanting to be fine with a small, modest and sustainable business that isn't growing by 102 100% every other quarter. I think it's just about changing the world world domination, and, you know, I think for maybe the past 15 or 20 years, that was a lauded approach to how we look at CEOs and now I think that sort of view is becoming questioned as tech is in for this reckoning right now.
(00:18:26): It's interesting because I think that for a lot of people listening to my question, they would just go well, money, Obviously clearly it's it's It's not just money, right? It's more than that. Yeah, I think I'm.
(00:18:37): Always, like, hesitant to put all this stuff on money just because a lot of the guys and again it's mostly guys that are running these companies. A lot of the guys out here have money right there set for life. Zuckerberg isn't doing it for the money. He has more money than anyone will ever be able to spend. You know, it's about conquest. It's about history. It's about making one's mark on the world. Or if you want to go, Steve Jobs, the dent in the universe thing and and really, it's about ego. A lot of this, too. And and so I'm hesitant to say, You know, these businesses only care about money because I think, you know, while it's obvious that money is a factor, it's not the thing that really drives them. At the end of the day, it's about.
(00:19:17): Maintaining power and beating your competitors so that you you don't have to worry about being usurped are becoming, you know, irrelevant at some point.
(00:19:26): Right, And in order to do that, you say I'm OK with let's say I'm gonna throw a number out here? Sure, 3% of listings being fraudulent and ah be damned, the customers said. That's that's That's just their problem.
(00:19:39): Yeah, it might be hard to hold the flat forms to 100% standard of keeping everything pristine or whatever, but that said, like they also know what they're getting into when they're building as quickly as possible without proper verification. So you have to sort of, at least at some point, come in and be like, Look, you need toe. Forget worrying about growth at all costs and start protecting the people on your platform, especially when it's having real world a potentially life threatening consequences.
(00:20:14): Mike Isaac is a tech reporter at The New York Times and the author of Super Pumped. The Battle for Over Mike, Thank you so much.
(00:20:22): Hey, thanks for having me.
(00:20:36): This is reset and I'm Ariel Jim loss. If you want to connect with me, you can find me on Twitter. I'm at a TRS, and you can reach the reset team by emailing reset at box dot com.
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