Passenger Right to Record at Airports and on Airplanes?

Passengers have every reason to record airline staff and onboard events–documenting onboard disputes (such as whether a passenger is in fact disruptive or a service animal disobedient), service deficiencies (perhaps a broken seat or inoperational screen), and controversial remarks from airline personnel (like statements of supposed rules, which not match actual contract provisions). For the largest five US airlines, no contract provision–general tariff, conditions of carriage, or fare rules–prohibits such recordings. Yet airline staff widely tell passengers that they may not record–citing “policies” passengers couldn’t reasonably know and certainly didn’t agree to in the usual contract sense. (For example, United’s policy is a web page not mentioned in the online purchase process. American puts its anti-recording policy in its inflight magazine, where passengers only learn it once onboard.) If passengers refuse to comply, airline staff have threatened all manner of sanctions including denial of transport and arrest. In one incident in July 2016, a Delta gate agent even assaulted a 12-year-old passenger who was recording her remarks.

In a Petition for Rulemaking filed this week with the US Department of Transportation, Mike Borsetti and I ask DOT to affirm that passengers have the right to record what they lawfully see and hear on and around aircraft. We explain why such recordings are in the public interest, and we present the troubling experiences of passengers who have tried to record but have been punished for doing so. We conclude with specific proposed provisions to protect passenger rights.

One need not look far to see the impact of passenger recordings. When United summoned security officers who assaulted passenger David Dao, who had done nothing worse than peacefully remain in the seat he had paid for, five passenger recordings provided the crucial proof to rebut the officers’ false claim that Dao was “swinging his arms up and down with a closed fist,” then “started flailing and fighting” as he was removed (not to mention United CEO Oscar Munoz’s false contention that Dao was “disruptive and belligerent”). Dao and the interested public are fortunate that video disproved these allegations. But imagine if United had demanded that other passengers onboard turn off their cameras before security officers boarded, or delete their recordings afterward and prove that they had done so, all consistent with passengers experiences we report in our Petition for Rulemaking. Had United made such demands, the false allegations would have gone unchallenged and justice would not have been done. Hence our insistence that recordings are proper even–indeed, especially–without the permission of the airline staff, security officers, and others who are recorded.

Our filing:

Petition for Rulemaking: Passenger Right to Record

DOT docket with public comment submission form

Enumerating Uber’s Scandals

Collecting my thoughts for an article about Uber’s mounting scandals and the proper legal and regulatory response, I took some time to review the range of recent concerns. It’s overwhelming — new issues arising daily, and prior problems almost inevitably forgotten. But by dividing the misdeeds into a taxonomy of subject areas, I’m seeing trends — identifying the areas where Uber falls furthest short. I offer my notes to others in hopes that they can help.

My tabulation:

Uber Scandals

David Dao on United Airlines (teaching materials)

Edelman, Benjamin, and Jenny Sanford. “David Dao on United Airlines.” Harvard Business School Case 917-026, May 2017. (educator access at HBP. request a courtesy copy.)

In widely circulated videos, United staff and Chicago security forcibly remove a passenger from his paid seat on an aircraft, injuring him severely. United leadership must decide how to respond to public outcry.

Teaching Materials:

David Dao on United Airlines – Teaching Note (HBP 917027)

How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process

In the United States, there are seven basic options for a consumer who wishes to pursue a dispute with an airline, travel agent, or tour operator:

  1. Informal correspondence with airline customer relations staff. Easy, usually via web site submission. You’ll typically get a response. (Indeed, US Department of Transportation rules require an airline to send a substantive written response within 60 days.) But there’s no guarantee that the complaint will be handled by someone who truly understands, nor that the response will be helpful or correct. The airline may anticipate that many people complain but few follow up on an unfavorable response — reducing their incentive to provide a full resolution or even conduct a complete investigation. Some customer relations staff may not have sufficient information or training to investigate unusual problems.
  2. Credit card chargeback. This is most useful if there is a recent, easily-provable, and impeccably documented overcharge. In principle, the merchant (airline) is obliged to demonstrate your acceptance of the charge and their performance of the promised service — and in principle the burden of proof is on their side. Furthermore, credit card disputes are adjudicated by card network staff who do not directly report to airline management, reducing some conflicts of interest. Credit card procedures are particularly useful to passengers in case of bankruptcy of an airline or travel agent, obliging the airline’s bank to provide the refund even if the airline cannot, whereas other methods typically are typically unable to assist in that circumstance. Furthermore, a successful credit card chargeback yields a direct payment (refund) to the passenger, with no need to pursue a collection effort against a distant company. Nonetheless, I am told that most credit card disputes are resolved in favor of airlines, as their positions are supported by at least an appearance of reliable records. Moreover, credit card dispute processes make it difficult to challenge records as unreliable or incorrect, or to challenge airline policies as violating law or regulation. These shortfalls make credit card disputes a poor fit for complex matters or unusual allegations.
  3. Litigation, most often in small claims court. Some judges are open to the suggestion that airlines screwed up, broke the law, or even failed to follow their own rules. Of course there’s no guarantee that the judge will be an expert or will be able to take the time to understand the unusual situation you describe or the specialized rules and laws pertaining to aviation. Decisions are usually unpublished and informal, making it easy for passengers’ arguments not to be considered in full.
  4. Pursue special state claims. Some states offer “seller of travel” laws (which could apply based on your residence, the state where the ticket was purchased, or the state where the online travel agency is based). These occasionally provide some recourse or compensation, for example if a travel agency or tour operator goes out of business or absconds with your money.
  5. Pursue any redress available under foreign law. Consider such options if the flight was international (potentially including domestic segments of an international itinerary) or the ticket was purchased from an airline office, travel agency, or tour operator outside the United States. Some countries offer greater protections than the United States. That said, most consumers would face significant difficulties pursuing claims in a jurisdiction where they do not reside.
  6. Informal DOT complaint (via this web form). DOT routes your complaint to a higher caliber of representative from the airline, compared to #1, and sometimes these staff are better positioned to assess your claim, consider the merit in your position, and provide a meaningful resolution. In principle DOT reviews the resolution of each matter, and this oversight or potential oversight imposes causes airlines to be more careful in responding to consumers’ informal DOT complaints. On the other hand, the proceeding is nonetheless secret and off-the-record. Your complaint will do nothing to help anyone else and typically won’t cause a change that fixes the underlying problem. DOT staff are sometimes involved in mediating these disputes, but you can’t count on this kind of assistance. Indeed, the Office of Inspector General found that the DOT’s reviews of passenger complaints are insufficient to determine whether airlines engage in unfair and deceptive practices.
  7. A formal DOT complaint via the process detailed below. These proceedings are formal and on the record. You’ll be corresponding with an airline’s designated representative, typically an attorney. All filings will be published on the web for anyone interested to read, and Airlineinfo and its Twitter feed make it particularly easy for the interested public to find and follow these disputes. DOT staff ultimately prepare a written decision summarizing each party’s position and offering an assessment. These factors increase the likelihood of a full investigation and proper analysis. That said, airlines take the position that DOT lacks authority to order refunds to affected passengers. Furthermore, decisions are often slow, commonly taking a year or longer.

This page elaborates on the seventh option, formal DOT complaints, as this process is not widely understood and not widely used despite its important potential benefits as detailed above.


Filing a formal complaint with the DOT: instructions and what to expect

For those inclined to proceed with formal DOT complaints, here are my tips based on the several such complaints I have filed and based on others’ complaints that I have followed.

There are five steps to filing a formal complaint with the DOT:

  1. Use my Microsoft Word Complaint Template to write your complaint. Explain the airline’s violation as clearly as you can. Use exhibits if needed to support the factual allegations. Consider exhibits to show relevant screenshots, call recording transcripts, ticket printouts, correspondence with customer relations, etc. Be sure to fill in your name in complaint header. On the title page and first page, leave the ___ placeholder (after the year) as docket number in your complaint; a docket number gets assigned by DOT staff after submission of the initial complaint. (If you use the template to file a reply or other supplemental document, insert the docket number then.)

    Avoid including personal information you do not want to reveal to the public. If needed, you can prepare two versions of the file – one “public” (redacted, for uploading to in step 4 below) and one private (with ticket numbers, passenger names, etc. for sending to DOT staff and airline attorneys in step 5 below).

    See sample complaints to confirm format and get a better understanding of typical style.

  2. Find the registered agent for the airline you’re complaining about. Use the DOT’s dockets for agents for service of process for foreign airlines or for domestic airlines, as appropriate. Insert the agent’s name and email onto the Certificate of Service page where indicated. After finding the agent’s name, you may need to use web search to find the corresponding email address. Many large airlines use attorneys at outside law firms as their designated agents. In that case, you can check the law firm’s web site or even call the law firm’s main line to request the attorney’s email address.
  3. Save the Word file into PDF for upload and submission.
  4. File the public version of the complaint on Go to the unusually-named Instructions on Filing a Submission to DOT–OST for applications/petitions/exemptions and any other items for which a Docket does not exist. Comment can be simply “Please see attached complaint”. Use the Upload Files feature to submit the public version of your complaint PDF. Provide your name. You do not need to provide your contact information through this tool. Note the Comment Tracking Number that results from your successful submission.
  5. Serve the private version of the complaint on the airline’s agent and on the DOT by email:

    To: [agent email from step 2],;;

    Subject: Third party complaint of [your name] – [airline name] – [date]


    A redacted public complaint (as to certain practices of [airline name]) was filed on earlier today. Attached is the full version including private information. Comment Tracking Number: [insert comment tracking number]

    Thank you,

    [your name]

The DOT contacts change from time to time. The three DOT contacts listed above are current (to my knowledge) as of October 2016.

Here’s what to expect after filing:

Once your complaint is docketed at, you’ll usually get an email from DOT staff to that effect. If not, wait a few days, then run a search for your last name on Each docket page provides a mechanism for automatic email notification when new filings are made in that docket. I highly recommend using that notification mechanism, including renewing it annually if your complaint remains unresolved after one year. Sometimes DOT or airline staff may forget to (or otherwise fail to) notify you of a new filing.

Formal complaints are governed by DOT rules contained in 14 CFR 302 subpart D. It’s useful to read those rules to learn what to expect.

An airline must respond to your complaint (by filing its “Answer”) within 15 days, unless it requests and receives an extension from DOT. DOT staff usually provide such an extension when requested. Airline representatives will ask you to accept, which you virtually must – in the sense that if you declined, the DOT would probably grant the extra time anyway. It’s also polite to grant the extra time; the benefit of this formal complaint process is its formality and its rigor, not its speed.

There is no guarantee of any particular timing for DOT judgment or resolution. Many complaints have gone more than a year without resolution. After a lengthy wait, you could inquire with DOT staff or contact your federal representatives to seek their assistance. I have not used these methods.

In general, a complainant has no right to respond to an airline’s Answer. If you want to file such a response (a “Reply”), you should seek agreement from the airline to do so (typically followed by a counter-response from the airline, called a “Surreply”). You must then seek DOT permission to reply. This can be an informal email to DOT attorneys, CC’ing the airline representative. You may want to propose a maximum page length, timing, and purpose. You’ll adapt the Complaint Template to file your reply, including replacing the “Complaint” heading with “Reply” (in every location including first page caption, second page caption, first page header, and subsequent page header) and adding the docket number on the first and second pages.

Once you file a formal complaint, you should avoid informal communications with DOT staff on the same subject.

Others have reported that airlines sometimes attempt to “buy off” a complainant privately – provide some money or whatever a complainant is requesting, in exchange for the complainant withdrawing the complaint. If you accept such an offer and withdraw your complaint, there will probably be no further proceedings in the docket, and hence nothing to benefit other passengers with similar problems. On the other hand you’ll get an immediate personal benefit.

I am unable to provide legal assistance to complainants, but I am often able to provide procedural pointers based on my experience in this area. Contact me.




My sincere thanks to Edward Hasbrouck, whose special knowledge of all things aviation-consumer spurred my interest in this subject. Thanks also to Mike Borsetti, whose knowledge of fare rules helped me understand my rights.

Formal DOT Complaints – A Guide for Consumers

When something goes wrong in air travel, consumers often need to reach an appropriate resolution with airline staff. But the standard methods are not always sufficient — sometimes ordinary customer relations staff are intransigent or just unresponsive, and a credit card chargeback is a poor fit for disputes that can be surprisingly complex.

In today’s post, I present a dispute resolution channel most consumers do not know about: formal complaints before the US Department of Transportation. The process lives up to the “formal” label, requiring documents formatted in a particular way, submitted through both web upload and email (neither particularly intuitive), with all proceedings posted for public review. But this approach typically goes straight to airline attorneys, and the on-the-record public proceeding helps assure high-quality discussion. In today’s piece, I explore known dispute resolution methods, then give interested consumers a guide to the DOT Formal Complaint process.

My guidance:

How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process

Response to Airbnb’s Report on Discrimination

This month Airbnb released a report investigating discrimination by its hosts against guests (including racial minorities and others), assessing the evidence of the problem and evaluating proposed solutions. The accompanying announcement offers lofty principles—"creating a world where anyone can belong anywhere."

In contrast to the company’s prior denials, Airbnb now admits the problem is urgent: "discrimination must be addressed"; "minorities struggle more than others to book a listing"; "some members of the community did not receive the timely, compassionate response they expected and deserved when they reported instances of discrimination"; Airbnb’s nondiscrimination policy was not widely known, within or outside company. This much is beyond dispute.

While Airbnb’s report is a step in the right direction, it does little to address the crucial subject of how to actually fix the problem of discrimination. Indeed, the report proposes actions of uncertain or unproven effectiveness.  At the same time, the report quickly dismisses a simpler alternative response—removing guest photos and names from booking requests—which would be far more likely to succeed. Meanwhile, the report completely fails to defend the legal gamesmanship by which Airbnb avoids litigation on the merits when consumers complain about Airbnb, and the report equally fails to defend Airbnb’s continued prohibition on users conducting research to uncover and measure discrimination for themselves.

This article offers my critique.

Airbnb’s bottom line

What exactly did Airbnb commit to change?

  1. Airbnb plans to increase the number of "Instant Book" properties, with a stated goal of one million by January 2017. Instant Book offers a potential mechanism to reduce discrimination: When hosts pre-promise to accept any interested guest who agrees to pay, they do not have the ability to screen each individual guest’s request, therefore leaving much less opportunity to discriminate.

    Nonetheless, Instant Book addresses only a portion of the problem. If disfavored guests are limited to Instant Book properties, they are left with a reduced set of properties, typically meaning an inferior match with their preferences as well as higher price and less flexibility. Furthermore, hosts can use cancellations—permitted, in certain quantities, under Airbnb’s rules—to undo the anti-discrimination benefits of Instant Book.

    Moreover, Airbnb’s million-property goal is at best ambiguous. Airbnb doesn’t say how many Instant Book properties are already available, so it’s hard to assess how big an increase that would be or how realistic it is. Nor does Airbnb indicate the methods to be used to achieve the increase. If January comes and the objective has not been reached, what then?

  2. Airbnb says it will "experiment with reducing the prominence of guest photos in the booking process." Certainly photos have been prominent, and to its credit Airbnb now agrees excessively so, in light of the limited information they actually convey and the superiority of other information (like objective verifications).

    Notably, Airbnb’s plan to experiment with reduced photo size has been misreported in the press. For example, the Wall Street Journal reported that Airbnb "is planning to reduce the prominence of guests’ photos," and Diversity Inc. reported that Airbnb’s changes "include displaying photos … less prominently." But Airbnb’s actual promise wasn’t to reduce photo prominence. Rather, the company promised only to run an experiment, of unspecified duration and scope, with no commitment whatsoever as to subsequent changes. With so many caveats, it’s hard to put much weight on this response.

  3. Effective November 1, Airbnb will require users to accept a stronger and more detailed nondiscrimination policy: "By joining this community, you commit to treat all fellow members of this community, regardless of race, religion, national origin, disability, sex, gender identity, sexual orientation or age, with respect, and without judgment or bias."

    Airbnb’s policy offers commendable principles. But the company’s existing policy already included the same substance as the new wording. Will a compulsory screen or checkbox actually prevent hosts from continuing to discriminate? Airbnb offers no evidence that a restated policy will make a difference.  Indeed, experience from other types of discrimination suggests that those who seek to discriminate will change only slowly and under significant pressure.

  4. Sometime during the first half of 2017, Airbnb promises to modify its site to prevent a host from telling one guest that a property is unavailable, then later accepting another guest’s request for the same nights. This change seeks to penalize hosts who falsely claim a property is unavailable: If a host rejects a guest due to a false claim of unavailability, the host won’t be able to keep the property listed for others, making the pretextual rejection more costly.

    Unfortunately, there’s little reason to think this approach will operate as claimed.  Instead, strategic hosts will switch to other reasons for rejecting guests—reasons guests can less readily prove to be pretextual.  An "unavailable" response would prevent the host from booking the property to someone else, but the host can instead specify some other reason for declining the request.  So there’s little reason to think this change will stop those who want to discriminate.

    This change will also hinder guests’ efforts to demonstrate discrimination. After rejection, a concerned guest may ask a friend to inquire (or creates a test account to do so), thereby proving that the rejection was due to guest identity and not genuine unavailability. This second inquiry provides a valuable verification, checking whether the host can keep his story straight. Substituting automatic software logic for fallible hosts, Airbnb makes it more difficult to catch a host in a lie.

    Finally, Airbnb offers no explanation why the company needs four to ten months to build this feature. Airbnb’s site already offers multiple categorizations for each night including available, unavailable, and booked. By all indications, this architecture could easily be extended to offer the promised feature—for example, a new status called "booked-locked" that a host cannot change back to available. If this feature is important and useful, why wait?

The proposed changes share common weaknesses.  They all rely on unproven and indeed unstated assumptions about how hosts will respond.  And each change leaves ample room to question whether it will help at all.  One might hope the combination would be more than the sum of its parts. But when each change falls so far short, it’s hard to be optimistic. These are not the "powerful systemic changes" Airbnb promises.

The better policy: remove guest names and photos

In sharp contrast to the indirect changes Airbnb proposes, a much simpler adjustment would more directly prevent discrimination: remove guest photos and names from the information a host sees when evaluating a guest’s request.  If a host could not see a guest’s photo and name before accepting a booking, the host would have no way to determine the guest’s race, age, gender or other characteristics. Even a host who wanted to discriminate would not have the information to make a decision based on the improper factor.

Removing photos and names is particularly compelling in light of best practice developed over decades in other contexts. In 1952, the Boston Symphony Orchestra began to audition musicians behind a screen. The result was a sharp rise in the number of female musicians—widely interpreted to be a decrease in arbitrary and improper discrimination. Similarly, Massachusetts landlords cannot ask about race, national origin, sexual orientation, age, religion, and myriad other factors—for there is little proper reason to make such inquiries, and if landlords have this information, many will struggle not to use it improperly.

Airbnb admits that "some have asked Airbnb to remove profile photos from the platform."  But oddly Airbnb offers zero discussion of the benefits that approach might offer. If Airbnb thinks removing photos would not reduce discrimination, the company offers no statement of its reasoning.  And Airbnb similarly says nothing of the other contexts where similar landlords, employers, and others have similarly elected to conceal information to reduce discrimination. Meanwhile, Airbnb says absolutely nothing of my proposal that hosts see guests’ pseudonyms, not actual names, when considering a request.  Instead, Airbnb focuses on three supposed benefits of continuing to show photos before booking.

  • First, Airbnb argues that photos are "an important security feature: hosts and guests want to know who they will be meeting when a stay begins." Here, Airbnb’s report echoes April 2016 comments from Airbnb’s David King, Director of Diversity and Belonging, who told NPR: "The photos are on the platform for a reason. … You want to make sure that the guest that shows up at your door is the person that you’ve been communicating with."

    This reasoning is particularly unconvincing. No doubt, hosts and guests should eventually see each other’s photos—but after a booking is confirmed.

  • Second, Airbnb says "profile photos are an important feature that help build relationships and allow hosts and guests to get to know one another before a booking begins."

    Airbnb’s reasoning ignores the competing interests at hand. Perhaps profile photos help some guests and hosts get to know each other.  But they also impede bookings by certain guests—notably including victims of longstanding and multifaceted discrimination. How should we weigh a small benefit to many, versus a large cost to a smaller (but important) group? At the same time, the "relationship" benefit is particularly shallow when the host offers an entire property, often with keys handed off via a doorman or lockbox, so the guest and host may never even meet in person. When there is little or no "relationship" to build, Airbnb’s reasoning provides particularly poor support for a policy that harms disadvantaged guests.

    Meanwhile, Airbnb’s "get to know one another" principle is undercut by the company’s actions in other contexts—calling into question whether this factor should be taken at face value. Notably, Airbnb prevents hosts and guests from sharing email addresses and phone numbers before confirming a booking, running software to scan every message for prohibited material. Airbnb does not impose these restrictions because they in some way help build relationships between users; quite the contrary, these restrictions prevent users from talking to each other directly, by email or phone, in the ways they find convenient. Rather, the Airbnb imposes these restrictions to protect its business interests—preventing guests from booking directly and circumventing the company’s fees. Airbnb’s "get to know one another" purpose thus seems conveniently self-serving—invoked when it supports Airbnb’s favored approach, but quickly discarded when costly.

  • Third, Airbnb proposes that "guests should not be asked or required to hide behind curtains of anonymity when trying to find a place to stay." The report continues: "technology shouldn’t ask us to hide who we are. Instead, we should be implementing new, creative solutions to fight discrimination and promote understanding."

    Here too, Airbnb’s approach favors the preferences of the many over the needs of those who face discrimination. While Airbnb frames its approach as not asking guests to be anonymous, in fact Airbnb does much more than that: Airbnb affirmatively prohibits guests from being anonymous, including requiring that guests register using their real names, validating names against government s and credit records, and presenting each guest’s real name, not a pseudonym, for host approval. Far from giving guests more choice to reveal or withhold information, Airbnb requires guests to reveal information—even when research makes clear that the information facilitates discrimination.

    If there was reason to think Airbnb’s other changes would actually, completely, and promptly end discrimination by hosts, guests might feel confident in sharing sensitive information such as race. But given the likelihood that discrimination will continue despite the changes Airbnb promises, disfavored guests have every reason to want to conceal information that could facilitate discrimination. Airbnb’s policy continues to disallow them from doing so.

Some might counter that Airbnb hosts are informal and ought to have more information than hotels or ordinary landlords. Indeed, one might imagine a policy that distinguished between classes of hosts. If a host occasionally offers a shared room or a portion of a property with the host on site, the relationship feels informal, and some might argue that anti-discrimination rules are overkill in such situations. Conversely, if the host is off-site and the guest uses the property exclusively, the arms-length relationship looks more like a hotel. By all indications, the latter is vastly more common than the former (whether measured in nights booked or, especially, revenue). Airbnb’s report could have considered policies that vary based on the property type—perhaps retaining photos and names for the most informal hosts, where personal interaction between guests and hosts is a realistic possibility, while removing them for hosts offering arms-length rental of entire properties. But Airbnb devoted not a single sentence to this possibility.

Airbnb report’s silence on compulsory arbitration—and the prior positions of Airbnb’s distinguished consultant-advisors

Airbnb’s report is completely silent on the company’s requirement that users arbitrate their disputes. Nowhere mentioned in the report, despite criticism in media discussions of discrimination at Airbnb, the company’s Terms of Service make arbitration compulsory for all complaints users may have about any aspect of Airbnb’s service. Airbnb drafted the arbitration requirement and does not allow users to negotiate its provisions (or anything else). The arbitration policy requires that any concerned user bring a claim on an individual basis, not in any kind of group with others who have similar concerns. The predictable—and by all indications, intended—effect of Airbnb’s arbitration requirement is that users cannot obtain meaningful relief for a broad set of complaints they may have against Airbnb.

Distinguished consumer organizations have widely criticized arbitration as improper for consumers’ disputes with companies. But for Airbnb, arbitration offers both procedural and substantive benefits.  No individual consumer could bring a compelling arbitration case against Airbnb: There would be no economic rationale for an attorney to accept such a case, as even the most favorable resolution of the dispute would bring a small recovery and correspondingly limited funds to pay for the attorney’s time. Only representing hundreds or thousands of consumers, en masse, would justify the time and talent of top attorneys. But Airbnb’s arbitration clause specifically disallows class actions and other group suits.

Moreover, arbitrators are chosen through processes that bias them against consumers’ claims.  One lawyer recently explained why arbitration tends to favor companies over consumers: "I use the same arbitrators over and over, and they get paid when I pick them. They know where their bread and butter comes from."

In the context of discrimination at Airbnb, new and novel questions make arbitration particularly inappropriate. Arbitration lacks an appeal process where different judges evaluate an initial decision—the proper way to develop policy in new areas of law. And with arbitration results secret, even if one consumer prevailed in arbitration, others would not learn about it. Nor would other arbitrators be bound by a prior dispute’s conclusions even in identical circumstances.

Tellingly, Airbnb is at this moment invoking its arbitration requirement to attempt to dispose of class action litigation alleging discrimination. In May 2016, Virginia resident Gregory Selden filed a class action complaint, alleging that discrimination on Airbnb violated the Civil Rights Act of 1964, 42 USC 1981, and the Fair Housing Act. In response, Airbnb did not dispute that Selden had faced discrimination, nor did Airbnb explore the question of whether the host, Airbnb, or both should be responsible. Rather, Airbnb merely invoked the arbitration provision, arguing that the court could not hear the dispute because Airbnb required all users to agree to arbitrate, and thereby required all users to promise not to sue. As of September 2016, the court has yet to rule. (Case docket.)

Throughout its report, Airbnb cloaks itself in the names and resumes of distinguished advisors (including a seven-page personal introduction from the author and additional listing of experts consulted). But Airbnb’s advisors have taken tough positions against compulsory arbitration—positions which undercut Airbnb’s attempt to invoke arbitration to avoid judicial scrutiny of its practices.

Consider the position of the ACLU during the time when Airbnb consultant Laura Murphy, the report’s sole author, was ACLU’s Legislative Director. In a 2013 letter to senators considering the Arbitration Fairness Act of 2013, the ACLU explained the importance of "end[ing] the growing predatory practice of forcing … consumers to sign away their Constitutional rights to legal protections and access to federal and state courts by making pre-dispute binding mandatory arbitration … clauses unenforceable in civil rights, employment, antitrust, and consumer disputes." The letter continued: "Forced arbitration erodes traditional legal safeguards as well as substantive civil and employment rights and antitrust and consumer protection laws." Similarly, the ACLU’s 2010 letter also noted that "[f]orced arbitration particularly disadvantages the most vulnerable consumers." Murphy’s position at the ACLU entailed overseeing and communicating ACLU’s positions on proposed federal legislation including this very issue.  Murphy’s failure to object to Airbnb’s ongoing use of arbitration clauses, which similarly eliminate both procedural safeguards and substantive rights for historically-disadvantaged groups, is particularly striking in the context of the ACLU positions she previously led.

Airbnb’s other consultant-advisors have similarly taken positions against compulsory arbitration. Consider Eric Holder, former US Attorney General, now a partner at the prestigious law firm Covington & Burling. Under Holder’s leadership, the US Department of Justice repeatedly opposed compulsory arbitration, including filing a Supreme Court amicus brief critiquing American Express’s attempt to impose arbitration on merchants. DOJ there argued that "the practical effect of [the arbitration agreement] would be to foreclose [merchants] from effectively vindicating their Sherman Act [antitrust] claims." DOJ went on to explain that the arbitration agreement makes an "impermissible prospective waiver" of unknown claims, and DOJ noted that private enforcement of federal statutes is important to the overall regulatory scheme—an objective that would be undermined if parties could be forced to effectively waive their claims through compulsory arbitration. Holder’s failure to object to Airbnb’s ongoing use of arbitration clauses, similarly designed to escape federal claims that cannot otherwise be pursued, is a sharp change from the DOJ positions he previously oversaw. I credit that Murphy is the sole author, and Holder and Airbnb’s other consult-advisors have taken no public position to endorse the report or Airbnb’s approach. But when Airbnb’s consultant-advisors allow Airbnb to use their names and credentials, both in the report body and in repeated statements to the press, they necesarily lend their reputations to the company’s approach.

Facing scrutiny of its arbitration provisions in June 2016, Airbnb told the New York Times that "these [arbitration] provisions are common." Certainly many companies require that customers arbitrate their disputes. But Airbnb’s service raises persistent and widespread concerns about discrimination (among other issues). Even if arbitration were appropriate for credit cards and cell phone plans (which, to be sure, many consumer advocates dispute), it may not be appropriate for questions of race, equality, and justice. Moreover, as Airbnb seeks public approval for its anti-discrimination efforts, it ought not reject the standard dispute resolution procedures provided by law. It is particularly galling to see Airbnb’s report totally silent on dispute resolution despite prior discussion in public discussions and the press. Airbnb should remove its arbitration clause, if not for all disputes, then at least for claims of discrimination.

Airbnb’s insistence that consumers arbitrate, without the benefit of courts or court procedures, is a stark contrast to Airbnb’s approach to protect its own interests. Airbnb does not hesitate to file lawsuits when lawsuits are in the company’s interest. Most notably, Airbnb recently sued San Francisco, Santa Monica, and Anaheim over laws it disliked. Whatever the merits of Airbnb’s claims (and on that point, see my July critique with Nancy Leong), Airbnb is happy to take its preferred disputes to court—while specifically prohibiting consumers from doing so.

Testing and data

Airbnb says fixing discrimination is a "top priority," and this month’s report repeatedly echoes that claim. In that context, one might expect the company to welcome academic research to help investigate. Instead, Airbnb specifically bans it.

Consider the limits of research to date. My 2015 paper (with Mike Luca and Dan Svirsky) analyzes experiences of rookie Airbnb guests in five cities. Much is left to be studied. How about outcomes in other cities? What happens when a guest gets a favorable review from a prior host? Do hosts tend to prefer a white rookie guest with no reviews, or a black guest with a single five-star review? How about guests who have verified their Airbnb credentials by linking Facebook and LinkedIn accounts or completing other profile verifications? Do outcomes change after Airbnb’s September email to users and (planned) November policy change? Via the same methodology demonstrated in our paper, other researchers could test these questions and more. But Airbnb specifically prohibits such research via Terms of Service provisions. For one, Airbnb disallows the use of software to study its site (TOS section 14.2) looking for patterns that indicate discrimination. Moreover, Airbnb specifically prohibits creating multiple accounts (14.14), an approach widely used (by us and others) to compare the way hosts respond to guests of varying race.

These problems have a particularly clear solution. Airbnb should revise its Terms of Service to allow bona fide testing.

Airbnb’s report also offers a series of claims grounded in data ("The company’s analysis has found…", "Airbnb’s research and data show…") as well as promises to collect additional data and run additional analyses. But Airbnb asks the public to accept its analyses and conclusions without access to the data supporting its conclusions. Airbnb should offer more to counter skepticism, particularly after widely-discussed allegations of misleading or incomplete data. Certainly Airbnb could provide the interested public with aggregate data measuring discrimination and showing the differential outcomes experienced by white versus black users. If Airbnb now has mechanisms to measure discrimination internally, as the report suggests, it’s all the more important that the company explain its approach and detail its methodology and numerical findings—so past outcomes can be compared with future measurements.

Airbnb’s response in context

In my June article proposing methods to prevent discrimination at Airbnb, I called for concealing guest photos when guests apply to hosts, similarly concealing guest names, normalizing dispute resolution, and allowing testing. I didn’t expect Airbnb to do all of this. But I was disappointed that Airbnb’s response discusses only the first of these four changes, and even that only superficially. Based on Airbnb’s promise of a "comprehensive review," I hoped for more.

Airbnb argues that "there is no single solution" to discrimination and that "no one product change, policy or modification … can eliminate bias and discrimination." Certainly one might imagine multiple policies that would help make a difference, and the combination of multiple policies might be more effective than a single policy alone. But temporarily concealing photos and names, as guests apply to hosts, is the simplest and most promising solution by far. The bar is high for Airbnb to reject this natural and well-established approach; Airbnb’s report offers little to convince a skeptical reader that appropriate concealment, so widely used in other contexts, would not work at Airbnb. Nor does Airbnb’s report make any serious effort to establish that Airbnb’s alternatives will be effective. In both these respects, the concerned public should demand more.

Refunds for Minors, Parents, and Guardians for Purchases of Facebook Credits

On May 26, 2016, the U.S. District Court for the Northern District of California approved the settlement of a class action against Facebook involving in-app purchases of Facebook Credits by minor children. The case was maintained on behalf of a class of children who were Facebook users (“child users”) below the age of 18 from whose Facebook accounts Facebook Credits were purchased. The case was filed by two minor children through their parents on February 23, 2012. The two children and the class were represented by attorneys Brooks Cutter and John R. Parker of the Cutter Law Firm in Sacramento, California; Daniel B. Edelman of the firm of Katz, Marshall & Banks in Washington, D.C.; and Benjamin Edelman, an associate professor at the Harvard Business School. On March 10, 2015, the Court certified the case as a class action for purposes of declaratory and injunctive relief on behalf of all minor children who were users of Facebook from whose Facebook accounts Facebook Credits were purchased at any time between February 23, 2008 and the date of the certification order, March 10, 2015. At the same time, the Court declined to certify a class action for purposes of class-wide monetary relief.

During the period covered by the suit, hundreds of thousands of child users purchased Facebook Credits for use in playing Facebook-based games and applications. To make such purchases, child users generally used credit cards, debit cards or other payment instruments that belonged to their parents or other responsible adults. Facebook made a practice of retaining the payment information provided at the time of the child user’s initial purchase for easy use in later purchases. Facebook advised that purchases by children were to be made only with the permission of the parent or guardian. Facebook did not, however, require evidence that any of the purchases was actually authorized by the parent, guardian or owner of the payment instrument. In many instances, the child user did not have authorization to use the card or other payment instrument to purchase Facebook Credits. Facebook specified in its terms of use that all transactions are “final”. It later stated that all transactions are “final except as otherwise required by law”.

Facebook’s Terms of Use state that purchase transactions are governed by the law of California. The Family Code of California provides that contracts with minors are voidable by the minor at any time before attaining the age of 18 or within a reasonable time thereafter. The court applied that principle to this case: “The law shields minors from their lack of judgment and experience and under certain conditions vests in them the right to disaffirm their contracts. Although in many instances such disaffirmance may be a hardship upon those who deal with an infant, the right to avoid his contracts is conferred by law upon a minor for his protection against his own improvidence and the designs of others. It is the policy of the law to protect a minor against himself and his indiscretions and immaturity as well as against the machinations of other people and to discourage adults from contracting with an infant.” (MTD decision, October 25, 2012, at pp. 11-12.) The court continued: “[O]ne who provides a minor with goods and services does so at her own risk.” (Id. at p.12.)

Facebook defended the claims in part by arguing that kids had received and used the electronic goods they paid for. The court specifically rejected this reasoning, finding that kids are entitled to refunds even for items they used. “Under California law, a minor may disaffirm all obligations under a contract, even for services previously rendered, without restoring consideration or the value of services rendered to the other party.” (MTD Decision at p.14, internal quotation marks omitted)

Prior to the settlement, Facebook provided an online procedure for refund requests in various specific circumstances such as fraudulent use of a user’s account by a third-party. Facebook’s refund procedure did not include an option to request a refund on the ground that the purchase was made when the user was a minor.

The settlement requires Facebook to apply refund practices and policies with respect to U.S. minors that comply with the California Family Code.

The settlement further requires Facebook to “add to its refund request form for In-App Purchases for U.S. users a checkbox or substantially similar functionality with accompanying text such that users are able to indicate that the In-App Purchases for which they are seeking a refund was made when the user was minor.”

The settlement additionally requires Facebook to “implement a dedicated queue within Facebook to address refund requests in In-App Purchases, made by U.S. Minors subject to verification of minority. The employees staffing the dedicated queue will receive further training regarding how to analyze and process such refund requests in accordance with applicable law.”

If you or your minor child were charged for Facebook credits purchased from an account belonging to someone age 17 or younger, you may be entitled to obtain refunds for such purchases through the use of the dedicated queue established by Facebook as a result of the settlement. Both minor account holders and the parents and guardians of such minors are entitled to claim such refunds. Claim refunds via the Facebook refund tool.

Free access to selected case documents via

Aviation Consumer Protection – Research and Complaints

Air travelers often trust that airlines will treat them fairly, in accordance with law and regulation. In fact, problems abound. I have gathered my research on aviation consumer protection matters, including findings of impropriety as well as complaints to the US Department of Transportation. I also include selected significant complaints by others. My tabulation:

Aviation Consumer Protection – Research and Complaints

Preventing Discrimination at Airbnb

In January 2014, Mike Luca and I posted a study finding that black hosts on Airbnb face discrimination: by all indications, guests are less willing to stay at their properties, forcing them to lower their prices to attract guests. More recently, Mike Luca, Dan Svirsky, and I contacted hosts using test guest accounts that were white and black, male and female, showing that black guests are less likely to be accepted by hosts. Both findings are troubling: The Internet has the power to make markets fairer and more inclusive, but Airbnb designed its platform to make race needlessly prominent, all but inviting discrimination.

Initially Airbnb responded to our research by framing discrimination as a problem that has "plagued societies for centuries" and emphasizing that the company "can’t control all the biases" of its users. After a barrage of media coverage, Airbnb CEO Brian Chesky this month admitted that discrimination is a "huge issue" and said the company "will be revisiting the design of our site from end to end to see how we can create a more inclusive platform." Indeed, today Airbnb convenes an invitation-only summit in Washington to discuss the situation and, perhaps, design improvements.

While I applaud Airbnb’s new interest in fighting discrimination on its platform, I can’t agree with Chesky’s subsequent claim that preventing discrimination on Airbnb is "really, really hard." Quite the contrary, the solution is apparent and has been known for years. In today’s piece, I renew my longstanding proposal that would substantially fix the problem, then offer two smaller adjustments that are appropriate under the circumstances.

The solution: Limit the distribution of irrelevant information that facilitates discrimination

Online environments make it easy to limit the information that guests and hosts reveal. If certain information causes discrimination, the natural remedy is to conceal that information so customers do not consider it when making booking and acceptance decisions.

Names and photos typically indicate the races of Airbnb guests and hosts. But names and photos are not necessary for guests and hosts to do business. Hosts and guests can amply assess one anothers’ trustworthiness using the significant other information Airbnb already collects and presents. For these reasons, I contend that the Airbnb site should not reveal sensitive race information until a transaction is confirmed. If guests and hosts don’t see names and photos in advance, they simply won’t be able to discriminate on that basis.

The proposal is a smaller change than it might at first appear. In fact, Airbnb has long limited information flows to advance its business interests. Airbnb’s revenue depends not just on introducing hosts to guests, and vice versa, but on transactions actually flowing through Airbnb’s platform so Airbnb can charge booking fees. Airbnb’s revenue would drop if guests and hosts could contact each other directly and agree to pay via Paypal, cash on arrival, or similar. To prevent hosts and guests from going around Airbnb, the company withholds email addresses and phone numbers while the users are still discussing a possible stay — letting each user examine the other’s profile, reviews, verifications, and more, but intentionally withholding the two pieces of information that would undermine Airbnb’s revenue. But Airbnb doesn’t just limit information presented in profiles and request templates; it also affirmatively filters messages between guests and hosts. Airbnb provides a text message system to let users ask questions and share more details, but it doesn’t want the messages to be used to cut Airbnb out of the transaction. So Airbnb’s servers examine each message and blocksanything that looks like an email address or a phone number. In short, there’s ample precedent for Airbnb withholding information — when it wants to.

I anticipate several objections to the proposed change:

  • Trust and safety. Certainly trust issues are central to Airbnb’s business — letting strangers stay in your home when you’re not there to supervise; staying in a stranger’s home when you’re at your most vulnerable (asleep). In that context, some might argue that every possible piece of additional information is important and should be provided. But I question what information the names and photos truly add. Airbnb already validates users’ identities, including checking driver’s license photographs and asking identity verification questions that impostors would struggle to answer. Airbnb reports linked Facebook and LinkedIn profiles, and Airbnb presents and tabulates reviews from prior transactions. Plus, all Airbnb transactions are prepaid. As a result, a host considering a guest’s request learns that the prospective guest has (say) a verified phone number and email, verified identity, verified Facebook and LinkedIn profiles with two hundred connections in total, and five favorable reviews from other Airbnb stays within the last year. A name and photo reveal race, gender, and age, but they provide little information about genuine trustworthiness. Whatever information the name and photo provide, that information comes more from (potentially inaccurate) stereotypes than from the name and photo themselves.
  • Perhaps users would be confused by communications without names. But "Airbnb Guest" and "Airbnb Host" make fine placeholders. Alternatively, Airbnb could move to a username system, letting users choose their own nicknames to use before a transaction is confirmed. eBay follows exactly that approach, and it works just fine. Airbnb would still organize a host’s messages with a given guest into a single page, and vice versa.
  • Some hosts want to see guest photos before accepting a request, and vice versa for guests choosing hosts. But if a homeowner is particularly concerned about strangers visiting his property, perhaps he shouldn’t be running a de facto hotel.
  • Photos help guests and hosts recognize each other. Airbnb’s David King, Director of Diversity and Belonging, in April 2016 told NPR: "The photos are on the platform for a reason. … You want to make sure that that guest that shows up at your door is the person that you’ve been communicating with." But nothing in the proposed change would prevent a host and guest from recognizing each other. After a booking is confirmed, they’d still see names and photos just as they do now. The change is to timing — revealing names and photos only after the booking is final.

In principle, Airbnb’s approach to names and photos could vary based on the type of listing. For example, names and photos might be viewed with special skepticism when a guest is renting the entire property. After all, when a guest occupies a property exclusively, the guest and host will have limited interaction. Indeed, they may never meet in person at all, exchanging keys via a doorman or lockbox. Then the specific identity of guest and host are all the less important. Conversely, it’s somewhat easier to see a proper role for photos and names when a host is truly "sharing" a property with a guest, jointly using common property facilities (perhaps a shared kitchen) or otherwise interacting with each other.

Allow testing

After our study, several users ran their own tests to assess possible discrimination. For example, after being rejected by a host, a black guest might create a new account with a "white-sounding" name and a photo of a white person — then use that new account to reapply to the same host. Multiple users have tested for discrimination via this methodology. (Examples: 1, 2)

Crucially, Airbnb prohibits such testing. Airbnb’s compulsory Terms of Service forbids all test accounts, instead requiring that users "agree to provide accurate, current and complete information during the registration process." Furthermore, Airbnb specifically insists that each user "may not have more than one (1) active Airbnb Account," and Airbnb claims the right to entirely eject any person who creates multiple accounts. But if each a user is limited to a single account, in the user’s true name, most testing procedures are unworkable.

Airbnb rigorously enforces its prohibitions on test accounts and follows through on its threats to exclude users with multiple accounts. Indeed, during the testing for my second article about Airbnb discrimination, the company closed my personal account — even removing my reputation and reviews accumulated from prior stays. I requested that Airbnb reopen my account but have received no reply, and my account remains disabled to this day.

Airbnb has no proper reason to penalize those who test its services. It would be intolerable for a car dealership to post a sign saying "No testers allowed" in hopes of concealing prices that vary prices based on a buyer’s race. Nor should Airbnb be able to conceal discrimination on its platform through contractual restrictions and penalties.

Normalize dispute resolution

The standard American approach to dispute resolution is the legal system — judge and jury. Dissatisfied hosts and guests — such as those who think they’ve faced discrimination — ordinarily could go to court to explain the problem and try to articulate a violation of applicable law. But Airbnb specifically prohibits users from filing a standard lawsuit. In particular, Airbnb’s Terms of Service instead demand that "any dispute, claim or controversy arising out of or relating to … the Services or use of the Site … will be settled by binding arbitration."

For guests and hosts, arbitration presents several key problems. For one, Airbnb chose the arbitration service, so anyone pursuing a grievance might naturally worry that the arbitrator will favor Airbnb. Furthermore, arbitration results are confidential — so even if some users prevail against Airbnb, the interested public would never find out. Arbitration also provides little to no ability for complainants to get the documents they need to prove their case, for example by searching Airbnb’s records to learn what the company knew, who else complained, and what alternatives it considered. Nor does arbitration provide an appeals process appropriate for exploring new or complex questions of law. Most of all, Airbnb requires that each dispute proceed solely on an individual basis, and "the arbitrator may not consolidate more than one person’s claims." But individual complaints are inevitably small, with value too low to justify the top-notch attorneys and experts who would be needed to prove discrimination and explore Airbnb’s responsibility.

Courts, not arbitrations, are the proper way to resolve these important disputes. The appearance of legitimacy would be much improved if decisions were rendered by a judge and jury chosen through formal government processes. With access to Airbnb documents and records as provided by law, aggrieved users would be able to search for information to support their claims — giving them a fair chance to assemble the evidence they need. With appeals, a series of judges would assess the situation and correct any errors in legal reasoning. And with a single case assessing the rights of a group of similar users, economies of scale would allow users to get the specialized assistance they need to have a real shot.

I don’t know that aggrieved guests or hosts would prevail against Airbnb on matters of discrimination. In some respects, such a case would break new ground, and Airbnb would forcefully argue that it is individual hosts, not Airbnb itself, whose actions are out of line. But Airbnb should face such complaints on the merits, not hide behind a contract that prevents users from bringing suit.

Airbnb told the New York Times that "these [arbitration] provisions are common." Certainly many companies require that customers arbitrate any disputes. But Airbnb’s service is special, raising persistent and serious concerns about discrimination (among other issues). These heightened sensitivities call for a different approach to dispute resolution — and a dispute system that works for credit cards and cell phone plans may not be right for questions of race, equality, and justice.

Airbnb also told the Times that "we believe ours [our arbitration agreement] is balanced and protects consumers." But it’s hard to see the balance in a contract that only takes rights away from users. Were the contract silent on dispute resolution, users could sue in any court authorized by law to hear the dispute, but instead Airbnb insists that not a single court, in any jurisdiction nationwide, can adjudicate any dispute pertaining to users’ relationships with Airbnb.

The incomplete benefits of Instant Book

Airbnb hosts are able to discriminate against disfavored guests because Airbnb’s standard process gives hosts discretion as to which guests to accept. Airbnb’s Instant Book feature thus offers a potential mechanism to reduce discrimination: When hosts pre-promise to accept any interested guest who agrees to pay, there’s much less opportunity to discriminate. Nonetheless, Instant Book addresses only a portion of the problem.

The biggest weakness of Instant Book is that only a fraction of properties offer this feature. A guest who wants to use Instant Book to avoid discrimination is thus accepting a much narrower range of properties. Airbnb periodically encourages hosts to try Instant Book, and it seems the proportion of properties with Instant Book is increasing, but slowly. That’s unsatisfactory: Guests shouldn’t have to choose between fair treatment and a full range of properties.

A second problem with Instant Book is that it serves only to protect guests from discrimination by hosts, but not to protect hosts from discrimination by guests. My research indicates that both problems are real, and Instant Book does nothing about the second.

A final concern is the prospect of cancellations that undo the anti-discrimination benefits of Instant Book. In principle a host could invoke Airbnb’s cancellation feature to reject a disfavored guest whose request was automatically confirmed by Instant Book. That’s exceptionally disruptive to the guest, taking away a booking which had already been paid in full and presented, to the guest and in Airbnb records, as confirmed. These problems are more than speculative; among others, the racist North Carolina host who canceled a black guest’s confirmed reservation had initially accepted that reservation via Instant Book.

To its credit, Airbnb requires a host to provide a reason when cancelling an Instant Book reservation, and Airbnb limits such cancellation to three per year. But the cancellations are penalty-free without any charge to hosts or any indication on a host’s profile page. (In contrast, when non-Instant Book hosts cancel reservations, they are charged fees and are penalized in profiles and on search results.) Moreover, three cancellations may suffice for many hosts to implement discriminatory preferences. If a host receives only occasional requests from the guests it seeks to discriminate against, the host could cancel those guests’ Instant Book stays with relative impunity.

Looking forward

Airbnb co-founder Joe Gebbia recently explained the site’s widespread use of photos of guests and hosts: "[A]nytime we could show a face in our service, we would … – in search results, on profiles, on the actual homepage.” Certainly photos are visually appealing and add some information. But the risk of discrimination appears to be unavoidable when photos are presented before a transaction is confirmed. No one would tolerate a hotel that required prospective guests to submit photos — nor a traditional bed-and-breakfast that did so. Nor should this approach be used online. The risk of discrimination is just too great relative to any benefit the photos may provide.

In January 2014, Mike Luca and I suggested the changes Airbnb should make to prevent discrimination:

[T]here is no fundamental reason why a guest need s see a host’s picture in advance of making a booking — nor does a guest necessarily even need to know a host’s name (from which race may be infered…). Indeed, Airbnb itself prohibits (and run s software to prevent) hosts and guests from sharing email addresses or phone numbers before a booking is made, lest this information exchange let parties contract directly and avoid Airbnb fees. Given Airbnb’s careful consideration of what information is available to guests and hosts, Airbnb might consider eliminating or reducing the prominence of host photos: It is not immediately obvious what beneficial information these photos provide, while they risk facilitating discrimination by guests. Particularly when a guest will be renting an entire property, the guest’s interaction with the host will be quite limited, and we see no real need for Airbnb to highlight the host’s picture.

Two and a half years later, the proposal remains appropriate, easy, and effective. Airbnb CEO Brian Chesky says the company "needs help solving" discrimination on Airbnb . Perhaps our longstanding proposal can be of assistance.

Uber Overcharges, Spring 2016

While claiming price advantages over taxis, Uber overcharges consumers by withholding promised discounts and credits. In today’s post, I examine a set of Uber pricing guffaws — each, a breach of the company’s own unambiguous written commitments — that have overcharged consumers for months on end. Taken together, these practices call into question Uber’s treatment of consumers, the company’s legal and compliance processes, and its approach to customer service and dispute resolution.

A "free ride" or a $15 discount?

Uber offers 'free rides' when users refer friends. Uber offers "free rides" when users refer friends.

Uber specifically confirms that the friend's 'first ride' is free, while the existing user gets 'a free ride (up to $15).'Uber specifically confirms that the friend’s "first ride" is free, while the existing user gets "a free ride (up to $15)."

Uber asks existing users to refer friends — promising significant sign up bonuses to both new and existing users for each referral. First, the existing user activates the Free Rides function in the Uber app, revealing the offer and a code that the new user must enter so Uber can track the referral. Quoting from the first screenshot at right (emphasis added):

Share your invite code [placeholder]. Send friends free rides and you’ll get one too, worth $15! Details. INVITE FRIENDS.

A user who taps "Details" sees two additional sentences (quoting from the second screenshot at right):

Share your promo code with friends and they’ll get their first ride free. Once they’ve tried Uber, you’ll automatically get a free ride (up to $15) the next time you use Uber. CLOSE.

Neither screen provides any menu, link, button, or other command offering more details about other requirements or conditions. The text quoted above is the entirety of Uber’s offer.

Uber’s promise is clear — a "first ride free" for the new user, and a "free ride (up to $15)" for the existing user. But Uber’s actual practice is quite different. Most notably, the new user’s "free ride" is also limited to a $15 discount. One might ask whether the "worth $15" in the first screen applies to the friend’s free ride or to the existing user’s free ride or perhaps both. But the Details screen leaves no doubt that this limitation applies only to the existing user. Notice the placement of the "up to $15" parenthetical only in the sentence describing the existing user’s free ride. In contrast, the separate sentence about the new user’s ride promises "their first ride free" with no indication of any maximum value.

These discrepancies create unfortunate surprises for typical Uber customers. Consider the standard workflow. An existing Uber user tells a friend about Uber and, in person, helps the new user install the app and create an account, including entering the existing user’s referral code when prompted. "You’ll get a free ride," the existing user explains, guided by Uber’s simple on-screen offer. The new user then takes an expensive ride; expecting the ride to be free (as promised), the new user might choose Uber for a distance that would otherwise have been a better fit for a train or bus, or the new user might accept a high surge multiplier. Only later does the new user learn that according to Uber, "free" actually meant a $15 discount. The user would have no written evidence of Uber’s "free ride" promise, which was conveyed orally by the existing user. So the new user is unlikely to complain — and my experience (detailed below) indicates that a request to Uber is unlikely to get satisfaction.

I know about these problems because of an experience referring a friend — call her my cousin — in January 2016. I told her she’d get a free ride, but her receipt showed no such benefit. In fact she took her first ride in another country, which prompted me to check for other discrepancies between Uber’s marketing statements and its actual practice.

Piecing together statements from Uber’s support staff and the various disclosures in Uber’s Android, iOS, and mobile web apps, I found five separate restrictions that were not mentioned mentioned anywhere in Uber’s new user offer as presented to existing Android users:

  • The new user’s credit only applies to a ride in the country that Uber designates as the new user’s home country or the currency that Uber designates as the new user’s home currency. But Uber’s signup page doesn’t ask about a user’s home country or currency. As best I can tell, Uber automatically sets a user’s home country based on the user’s IP address or location at the time of signup. (Source: Uber staff indicated that "the promo is currency specific" in explaining why my cousin received no discount on her first ride.)
  • The existing user’s credit can only be redeemed towards a ride in the country that Uber designates as the existing user’s home country. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen, stating that "discounts apply automatically in your country," emphasis added.)
  • The new user’s maximum ride value varies by country. Not only is there a maximum value (contrary to the simple "first ride free" in Uber’s second screen above), but the maximum value is not mentioned to the existing user. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen; and mobile web, new user offer, page footer.)
  • All discounts expire three months from issue date. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen.)
  • Offer is not valid for UberTaxi. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen; and mobile web, GET FREE RIDES offer, page footer.)

The table below presents the Uber’s marketing offers in all three platforms, along with the errors I see in each:

  Android iOS Mobile Web
Primary disclosure FREE RIDES. Share your invite code [placeholder]. Send friends free rides and you’ll get one too, worth $15! Details. INVITE FRIENDS. GET FREE RIDES. They get a free ride and you will too (worth up to $15), after their first ride. Details. GET FREE RIDES. Sign up now to claim your free gift from [placeholder] ($15 off first ride)*.
Secondary disclosure Share your promo code with friends and they’ll get their first ride free. Once they’ve tried Uber, you’ll automatically get a free ride (up to $15) the next time you use Uber. CLOSE.

Every time a new Uber user signs up with your invite code, they’ll get their first ride free (value amounts vary by location).

Once they take their first ride, you’ll automatically get your next ride free (worth up to $15).

Discounts apply automatically in your country and expire 3 months from their issue date. Offer not valid for uberTAXI.

Every time a friend signs up with your invite code, they’ll get their first ride free (value amounts vary by country). Once they use it, you’ll automatically get a free ride to use the next time you Uber (worth up to $15). Offer not valid for UberTaxi.

New user’s ride is actually limited to $15 (or other amounts in other countries). In contrast, both disclosures indicate that there is no limit to the value of the new user’s ride.

Discount only applies to a new user’s first ride in the user’s home country as determined by Uber.

Existing user’s discount can only be redeemed in existing user’s home country.

Discounts for both the new and existing user expire three months from issue date.

Offer is not valid for UberTaxi.

Secondary disclosure plausibly contradicts primary disclosure: Primary disclosure promised "a free ride" for the new user, while secondary disclosure retracts "free ride" and instead offers only a discount. In contrast, FTC rules allow secondary disclosures only to clarify, not to contradict prior statements.

Discount only applies to a new user’s first ride in the user’s home country as determined by Uber.

Discount only applies to a new user’s first ride in the user’s home country as determined by Uber.

Existing user’s discount can only be redeemed in existing user’s home country.

Discounts for both the new and existing user expire three months from issue date.

I first alerted Uber staff to these discrepancies in January 2016. It was a difficult discussion: My inquiries were bounced among four different support representatives, with a different person replying every time and no one addressing the substance of my messages. So I reluctantly gave up.

Six weeks later, a different Uber rep replied out of the blue. He seemed to better understand the problem, and I managed to get two separate replies from him. At my request, he committed to "pass this along to the appropriate team." That said, he did not respond to my repeated suggestion that Uber needed to refund affected consumers.

Eight weeks after my final correspondence with the fifth Uber representative and sixteen weeks after I first alerted Uber to the problem, I see no improvement. Uber’s Android app still makes the same incorrect statements about promotion benefits, verbatim identical to what I observed in January.

Credit on your "next trip" — or later, or not at all

Uber claimed I'd get a 'credit' on my 'next trip.' Uber claimed I’d get a "credit" on my "next trip." In fact, the credit seems to apply only to a future trip in the same country where the problem occurred.

In a variety of circumstances, Uber responds to customer complaints by issuing credits towards a customer’s "next trip." For example, during a recent attempt to ride with Uber in Mexico, I was unable to find or contact the driver. (I was where the on-screen pushpin told me to be, and GPS seemingly told the driver he was where he was supposed to be, but we just couldn’t find each other.) I later received an email receipt showing that I had been charged a cancellation fee. In Uber’s "Help" area, I used Uber’s "I was charged a cancellation fee" feature, and I was immediately advised (emphasis added):

We’ve credited your Uber account. Thanks for letting us know what happened. A credit has been added to your Uber account. This credit will apply to your next trip.

Imagine my surprise when, upon returning to the US a few hours later, I took another Uber ride but received no such credit.

It seems Uber’s notion of credits is in fact country-specific or currency-specific. My problem resulted from difficulty finding a driver in Mexico, where I don’t live and rarely travel. Far from applying the credit on my "next trip," it seems Uber’s systems will carry the credit forward to my next journey in Mexico. (See Uber’s Payment screen, "Credit Balances" section, showing the amount of the cancellation fee as a credit in the currency associated with the country where that fee was charged.) But this is much less useful to users traveling internationally. For example, Uber might impose a time limit on the credit — analogous to Uber’s undisclosed three month limit for use of a "free ride" credit (as revealed in the preceding section). And some users may never return to (or never again take Uber rides in) certain countries or currencies. The plain language of "your next trip" of course purports to protect users against all these contingencies; "your next trip" means a trip denominated in any currency, perhaps soon but perhaps indefinitely in the future. Uber’s actual practice is plainly less favorable to consumers.

Here too, predictable consumer responses increase the harm from Uber’s approach. If a consumer was charged improperly and felt Uber’s response was out of line, the consumer might pursue a credit card chargeback. But when Uber tells the consumer "We’ve credited your Uber account" and "This credit will apply to your next trip," there’s every reason to think the problem is completely fixed. Then the consumer may forget about the problem; certainly the consumer is less likely to diligently check future Uber receipts for a credit that was slated to be automatic and guaranteed. In addition, consumers are vulnerable to the passing of time: If a consumer rides with Uber only occasionally, the permissible time for a chargeback may have elapsed by the time the consumer’s next ride.

Update (May 25, 2016): Four weeks after I reported this discrepancy to Uber, I received a reply from an Uber representative. He confirmed that I did not receive the promised credit for the general reason I described above — a credit provided in one currency, while my next trips was in a different currency. I reminded him that Uber’s statements to users say nothing of any such restriction. I also pointed out that Uber is capable of converting currencies, and I encouraged him to assure that other users, similarly situated, are appropriately refunded. So far as I know, Uber has not done so.

Others’ reports

Checking with friends and colleagues, and receiving further reports from strangers, I’ve learned about a fair number of other Uber billing errata. For example, one user confidently reported that when a driver cancels a ride — perhaps seeing a surge in another app, getting lost, learning that the passenger’s destination is inconvenient, or just changing his or her mind — Uber still charges the passenger a cancellation fee. I haven’t been able to verify this, as I don’t have an easy way to cause a driver to cancel. But in the Uber help tool, the "I was charged a cancellation fee" menu offers as one of its preset reasons for complaint "My driver cancelled" — confirming that Uber’s systems charge cancellation fees to passengers when drivers cancel. Of course Uber’s systems can distinguish who pressed the cancel button, plus Uber could ask a driver the reason for cancellation. I see no proper reason for Uber ever to charge a passenger a cancelation fee if it is the driver who elected to cancel.

Users with experience with this problem, or other Uber contracting or billing errata, should feel free to contact me. I’ll add their experiences here or in a follow-up.

Update (June 4): Readers alerted me to UberPool drivers repeatedly charging for two passengers purportedly riding, when only one passenger was actually present, increasing the charge to passengers.

Update (June 4): In federal litigation against Uber, blind passenger Tiffany Jolliff reports that not only did multiple Uber drivers refuse to transport her and her service dog, but Uber charged her a cancellation fee each time a driver refused to transport her.

Lessons from Uber’s billing errors

I see four distinct takeaways from these billing errors. First, Uber’s engineering, testing, and legal teams need to sharpen their focus on billing, promotions, and credits. The coding of a promotional offer is inextricably linked to the marketing text that describes the offer. Similarly, the coding of a customer service benefit must match the text that explains the benefit to users. Both should be checked by attorneys who specialize in advertising law and consumer protection. Instead, in the problems I described here, Uber’s billing logic seems to be entirely separate from the text presented to consumers. It is particularly striking to see Uber’s three separate textual descriptions of the new user promotion — all three of them incorrect, yet in three different ways. Even a basic attorney review would have flagged the discrepancies and identified the need to inquire further. An advanced attorney review, fully attuned to FTC disclosure rules, might also question what appears in the primary disclosure versus the secondary disclosure. Attorneys might reasonably caution Uber against repeatedly and prominently promising "FREE RIDES" when the company’s actual offer is a discount.

Second, Uber’s overcharging is both large and long-lasting. I reported the new user promotion problems in January 2016, although they probably began considerably earlier. (Perhaps Uber will respond to this article by determining, and telling the public, when the problems began.) In response to this article, I expect that Uber will fix these specific problems promptly. But given Uber’s massive operations — many thousands of new users per month — the aggregate harm is plausibly well into the millions of dollars.

Third, my experience calls into question whether Uber’s customer service staff are up to the task of investigating or resolving these problems. Writing in to customer service is fruitless; even with screenshots proving the discrepancy in the new user promotion, Uber was slow to promise a refund to match the marketing commitment. (It took five separate messages over eight weeks!) In fact, even after promising the refund in a message of March 16, 2016, that refund never actually occurred. Similarly, I promptly alerted Uber to the "next ride" credit not provided — but ten days later, I have received neither the promised credit nor any reply. Others have reported the shortfalls of Uber’s customer service staff including ineffective responses, a focus on response speed rather than correctness, and insufficient training. My experience suggests that these problems are genuine and ongoing. Users with the most complicated problems — Uber system flaws, discrepancies between records, billing errors — appear to be particularly unlikely to achieve resolution.

Finally, users lack meaningful recourse in responding to Uber’s overcharges. In each of the problems I found, Uber is overcharging a modest amount to each of many thousands of customers. Ordinarily, this would be a natural context for class action litigation, which would allow a single judge and a single set of lawyers to figure out what happened and how to set things right. But Uber’s Terms and Conditions purport to disallow users to sue Uber at all, instead requiring arbitration. Furthermore, Uber claims to disallow group arbitration, instead requiring that each consumer bring a separate claim. That’s inefficient and uneconomical. Uber’s arbitration clause thus provides a de facto free pass against litigation and legal remedies. Of course many companies use arbitration to similarly immunize themselves against consumer claims. But Uber’s controversial activities, including the overbilling described here among many other disputes, give consumers extra reason to seek judicial oversight.

Next steps

Just last week, Uber formed a paid advisory board of ex-regulators, most with competition and consumer protection expertise. These experts should exercise independent judgment in looking into the full breadth of Uber’s problems. I doubt overbilling was previously on their agenda, but my experience suggests it should be. To investigate, they might review all customer service threads with five or more messages, plus look for all messages attaching screenshots or mentioning "overcharge" or "promised" or "contract." Tthey shouldn’t rely merely on Uber staff summaries of customer experience; with an advisory board of superstars, the group should bring independent judgment to assessing and improving the company’s approach.

Meanwhile, Uber’s response should include a full refund to each and every user who was overcharged. For example, when Uber promised a "free ride" to an Android user who in turn referred a friend, Uber should provide the friend with a refund to achieve exactly that — not just the $15 discount that may be what Uber intended but isn’t what the offer actually said. Since Uber may be disinclined to offer these refunds voluntarily, I’m alerting consumer protection and transportation regulators in appropriate jurisdictions to help push to get users what they were promised.