Attorney General Shuts Down $45K Airbnb Operation

Peter Chen, a 30-year-old bartender and one of the top five Airbnb users in New York City, is only the latest person to become a target of the attorney general’s office for having at least one illegal listing on the website, which has exploded into a company worth $10 billion without following the same regulations as legal hotels.

By managing 38 of his friends’ rooms, Chen was able to make $45,000 a year to help pay his rent. He explains that his business grew in a natural, grassroots sort of way–through a word-of-mouth generated buzz. “Friends wanted to list their places but didn’t want to start at the very beginning,” said Chen. “Because I already had a hundred reviews, it would be easier for me to just manage it.”

“Online reviews have become a huge part of a businesses online reputation,” explains Keith Shirley, Owner and CEO of Blue Rise Media. “These ideally honest reviews about customer experiences should be used as honest and constructive feedback. Businesses have to be proactive in how they promote and reinforce the quality of the services they deliver if they’re going to open themselves up them. For many consumers, online reviews form a key part of the buying decision. Ignore them at your own peril!”

Although his rates varied by the time of the year and the type of the room, Chen made between seven to eight dollars a night managing his friends’ rooms, handling all of his duties on his mobile device. After he first started, he realized the potential capital that he could be making, and moved out, renting his old apartment to full time tenants. He then moved into a four-bedroom place, using only one of the rooms for himself and renting the other three out to tenants, which covered his rent. Any money made from managing his friends’ places was pure profit.

Though Chen insists that he’s innocent in the eyes of the law, Airbnb made a preemptive move in order to mitigate any further scrutiny from the attorney general, canceling Chen’s account, which sent him packing back to Craigslist.

State Attorney General Eric Schneiderman’s office argues that its most recent push against Airbnb is to stop the site from regularly flouting certain state laws. Schneiderman, amongst other critics, say that many of the Airbnb users run defacto hotels without following the same regulations.

Of course, if New York legislators don’t want citizens using the site to help earn some extra money on the side, then maybe they should consider using their positions to create legislature that’d make the city a more affordable place to live.