Class Action Settlement — Refunds for Certain American Airlines Checked Bag Fees

Bazerman v. American Airlines, Inc. is a consumer class action pending in the District of Massachusetts. The plaintiff alleges that American Airlines has charged passengers to check bags that should have been free under American’s contract with customers. On June 22, 2018, U.S. District Court Judge William Young preliminarily approved a settlement. If granted final approval, eligible American Airlines passengers who submit a valid, timely claim will receive either a 75% refund or a full refund plus interest for incorrectly charged bag fees. Awards will range from $18.75 to $200 plus interest per bag. Class members must submit a claim by November 26, 2018 to receive a refund. The final approval hearing is set for February 21, 2019. (Note that these dates were extended by court order.)

The Court has authorized notice to be sent to class members. Class members should receive an email on Saturday, July 21, 2018, with the subject line: “Notice of Class Action Settlement – Refunds for American Airlines Checked Bag Fees.” If you’ve flown on American in the past six years and get this email, you should read it since you may be eligible for a refund. The email includes a class notice and claim form. The case documents (including Claim Form and Class Notice) are available at the settlement website, aabaggagefeesettlement.com.

If you have any questions, you may contact Class Counsel: Linda M. Dardarian, Byron Goldstein, and Raymond Wendell at AAcheckedbags@gbdhlegal.com or 1-866-762-8575, or Benjamin Edelman.

Passenger Right to Record at Airports and on Airplanes? with Mike Borsetti

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 Regulations.gov 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.  (Unfortunately sometimes the designated agent is out of date.  See DOT admonition to airlines to keep this up to date.)
  3. Save the Word file into PDF for upload and submission.
  4. File the public version of the complaint on Regulations.gov. 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. Press the Comment button, then submit your complaint.  Suggested title: “Third party complaint of [your name] – [airline name] – [date]”.  Suggested comment: “Please see attached complaint”. Use the Attach Files command to submit the public version of your complaint PDF.  Provide your email address, first name, and last name when prompted.  It is optional to provide your contact information through the Regulations.gov submission tool. Note the Comment Tracking Number that results from your successful submission. Although Regulations.gov uses the term “Comment” during the submission process, your complaint will actually be posted as its own docket, not as a comment to any preexisting docket.
  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], blane.workie@dot.gov; robert.gorman@dot.gov; kimberly.graber@dot.gov

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

    Greetings,

    A redacted public complaint (as to certain practices of [airline name]) was filed on Regulations.gov earlier today. Attached is the full version including private information.

    Regulations.gov 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 Regulations.gov, 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 Regulations.gov. Each Regulations.gov 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.

Credits

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 Archive.org.

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