Airbnb Sort of Cares
Boy, it’s been an interesting couple of weeks for Airbnb. I have long been critical of the company, which is an illegal hotel-and-sublet marketplace. I have many arguments with friends who insist Airbnb is good. I completely understand the appeal - it’s cheap, it’s fairly easy, and it offers people the chance to stay in places they might not normally see if they were in a hotel. There are, however, some drawbacks. Allie Conti, a journalist at Vice, recently discovered one of the big ones.
An Airbnb is not a hotel. When you are not staying in a hotel, and are instead staying in someone’s house or spare room, there is no guarantee you’ll have a place to stay when you show up, because that person can simply…not let you in?
A previous guest had flushed something down the toilet, which had left the unit flooded with water, he explained. Apologetic, he promised to let us stay in another property he managed until he could call a plumber.
If you were staying in a hotel, they’d simply book you a different room. This host did book her a new room, though. Sort of.
After walking up and down North Kenmore Avenue, we were able to find a guest house hidden in a back alley that had a keypad on its front door. Once inside, we discovered what looked more like a flophouse than someone’s home.
Their illegal hotel was downgraded to an illegal hostel, which is not great.
…the next day, we got a text from the man, who said that the plumbing in the original rental hadn’t been fixed, but that new tenants were moving into our flophouse the next day.
All of this sounds pretty unpleasant, and it got even more unpleasant when the author attempted to get a refund from Airbnb for her stay.
Though I had been moved to a flophouse and then told to leave early, Airbnb only refunded me $399 of my $1,221.20, and only did so after I badgered a number of case managers over the course of several days. The $399 didn’t even include the service fees Airbnb charged me for the pleasure of being thrown out on the street.
And there it is. The problem with a company in Silicon Valley running an illegal hotel marketplace is that they have no practical way to inspect and certify millions of listings.
It turned out that the scammers had quite a few flophouses, almost a hundred across eight different cities. The stories from other guests were similar; they’d receive a call that the rental had plumbing issues, and be shunted off to a different, worse property. When the author contacted Airbnb, they didn’t even bother to respond.
And! Like many “gig” companies, Airbnb has a two way rating system, meaning hosts can rate guests, and vice versa. This gives potential scam hosts leverage over unhappy guests, since a bad rating can make it harder to rent future rooms. This actually happened to me - years ago I attempted to rent a ski cabin, but I’d only just joined Airbnb and two different hosts rejected me for “lack of reviews” before I finally gave up. Given the amount of fraud on the platform, I can’t say I blame them.
Airbnb responded to the piece this week with an announcement that they would do some things.
"Today, we are making the most significant steps in designing trust on our platform since our original design in 2008," Airbnb CEO and co-founder Brian Chesky said in an email to employees Wednesday.
Chesky said that the company would undertake a year-long project to ensure that every home listed on the platform is accurately advertised.
It feels like telling on yourself to start your announcement by admitting that you haven’t spent much time “designing trust” in the last decade, but hey. They’re also going to try their hand at having actual customer service:
…instituting a "24/7 Neighbor Hotline" that is run by a rapid response team, which Airbnb says will allow "anyone" to call the company "anytime, anywhere in the world and reach a real person at Airbnb."
I suppose if you’re a company in Silicon Valley with a 10 figure valuation you can’t just call it a “Customer Service Line” and have to disrupt call centers by calling them Neighbor Hotlines, which sounds like a premium service on Nextdoor. The fact that it took 11 years for a company that has over 7 million rental listings to put a telephone number on its home page tells you how seriously tech companies take consumer complaints.
Jho Low
Man, I have been waiting a while to write about Jho Low. For those of you who don’t spend your free time reading about international fraudsters, Low was the lone mastermind behind the 1MDB scandal. He and his co-conspirators stole around $5 billion dollars from the government of Malaysia and channeled it into all sorts of things. Low used his father’s social connections in Malaysia to cozy up to the corrupt prime minister and use funds intended for economic development to instead line his pockets and the pockets of his co-conspirators.
Roughly speaking, this is how it worked:
Malaysia, under Low’s direction, created a “development fund” (1MDB) which it intended to use to grow the country’s economy by investing in real estate, tourism, and agribusiness and forming strategic partnerships with other nations.
Jho Low, a recent college graduate with no investment or finance background would devise “investments” and used 1MDB funds to buy something, such as a stake in a business, or a piece of property.
The government would transfer the money to Low, who created a huge web of barely-legitimate-sounding shell companies.
Low would keep the money, and pay a portion of it out to the people who helped him facilitate his deals. They included Emirati sheiks, Malaysian politicians, and quite a few bankers.
As the scheme grew more complicated, Low enlisted the help of entire banks in Asia and Europe to help cover up his crimes. Goldman Sachs and Deutsche Bank were involved. It was very messy, and at least a few people have already gone to jail!
The entire caper is deserving of future posts, but this week we have some 1MDB news that involves an American, specifically one former New Jersey governor, Chris Christie.
As part of the 1MDB settlement, the Justice Department allowed for $15 million to be paid to a group advising Jho Low, including the law firm Christie set up after two terms as New Jersey’s governor.
Since his troubled tenure in the Garden State, Christie has become a bit of a professional enabler for financial criminals. It seems fitting that his law firm would take on Low as a client.
Putting all of this aside for a second, can we talk about how there was a negotiation between the United States government and a criminal fugitive, and now there is a legal settlement allowing him to pay $15 million dollars to his attorneys for his legal defense? Apparently this was because the government was tied up in a court forfeiture proceeding, which Low presumably could not pay for, but that Christie’s firm agreed to do on…contingency? This suggests Christie had a very high degree of confidence the government would eventually hand over millions of dollars to his firm if they agreed to surrender their claim to the rest of the billion dollars. I am not a lawyer, but if the government’s criminal complaint lays out an argument that Low stole all the money, why would it allow him to use the stolen money to pay his lawyers millions of dollars?
This reminds me of something! It’s called “civil asset forfeiture” and it is a highly controversial practice law enforcement uses to seize things from someone they merely suspect might be a criminal, and in many cases refuses to give them back. I’ll let you take a wild guess as to the general financial means of the people who are subjected to it. They do not have former governors representing them.
To summarize: an international fugitive stole almost $5 billion. The US government captured around $1 billion of that. The fugitive, through expensive lawyers, sued the US government saying that the $1 billion was legally his. The government settled with the fugitive’s lawyers for the sum of $15 million, and kept the rest. This has all occurred before any sort of criminal trial, because Low is in hiding, though presumably still has phone access to communicate with his expensive lawyers.
Low presumably has tens or hundreds of millions of dollars which he’s using to evade the international authorities; he was indicted in the US over a year ago. Despite this, the government is allowing him to use part of the money he’s agreed (???) to give back to pay his massive legal bills, while he remains a fugitive? It’s easy to make jokes about the different system of legal rules for rich people, but apparently those rules include a carve-out for the lawyers, who are allowed to get rich off the resulting legal conflict, regardless of whether the money is legally obtained. I have a feeling this sort of arrangement is common among the rich, but I steadfastly refuse to Google it until I have to write another newsletter next week.
Royally Fake
Disclosure: I hate the British royals. I find the entire family, the history, the public spectacle, all of it quite gross. However! It sometimes makes for good scam content. So here we are.
Prince Charles - well, his estate, since he could hardly be bothered to do anything himself - had some fake paintings in his house, it turns out.
[James] Stunt in turn loaned these self-proclaimed Tetro paintings and other works in his art collection to the Prince of Wales' charitable foundation, The Prince's Foundation, which briefly had them on display at Dumfries House, the 18th-century Palladian estate in Scotland that Charles helped save and now serves as headquarters for his foundation.
The shortest possible version of the story is that the shady guy who handles the Prince of England’s charitable foundation got some fake paintings as part of a free lease from a shady businessman who is now bankrupt. And he’s named Stunt.
Cool. So. We know the paintings are fake because the legal forger says he painted them and sold them to the bankrupt guy. Who says they are real. Or he did at first, and now says they might not be?
Stunt apologized to his "friend," Prince Charles, in an Instagram video and insisted in the video that the artworks were genuine but said, "Let’s say they were fake. What is the crime of lending them to a stately home, (to) the Prince of Wales and putting them on display for the public to enjoy?"
These people suck so much. I’m far more interested in how the world works for people who casually loan a Picasso or Dali to a friend. Many wealthy people buy art as a way to hide or launder money. Jho Low bought hundreds of millions of dollars worth of art. Other financially shady people use it as a measuring stick. So it comes as no surprise that priceless art floats around high British society to adorn their various mansions and summer homes.
Stunt is the nephew of a UK mob boss, he married the daughter of an F1 racing magnate, and blew hundreds of millions of dollars on real estate, art, cars, and wine. He was a social acquaintance of Prince Charles, for some reason. Why are any of these people friends? What do they talk about at parties? Their shared love of not working? I really don’t get it.
Anyhow, there was a brief moment of Royal embarrassment due to a couple of forged paintings, and I guess that’s all that will come of this. Thank god we don’t have these sorts of problems in America.
Short Cons
BuzzFeed News - ““There's red flags all over the place that says they’re just not real. The bigger issue here from the point of view of local news is they are further muddying the water as to what is real journalism and real news,””
New York Times - “many students sank hundreds of dollars into I’m Shmacked and ran Instagram accounts without pay. In interviews with The New York Times, students said that after they confronted the company over false promises, they were threatened with lawsuits and intimidated into silence.”
Bloomberg - “Scott, who has pleaded not guilty, is accused of using a network of shell companies, offshore bank accounts and phony investment funds to hide the origin of $400 million in illegal proceeds.”
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