Section 230 Helps VRBO Defeat Claim Over Fraudulent Listing–Hiam v. Homeaway

[It’s impossible to blog on Section 230 rulings right now without acknowledging that Section 230 is facing its most serious threat to date. I doubt the bills would change the result in this ruling, but the bills would so radically reshape the Internet ecosystem that it’s not clear how a company like VRBO would operate in the future. After all, sex traffickers have used short-term rentals as prostitution dens. In light of that, how would Airbnb and VRBO change their behavior to reduce their potential liability for sex trafficking pursuant to the proposed bills? Heck if I know, and I doubt Congress knows either.]

This case involves a property called the “Jewels of Belize Estate.” The complaint says a VRBO (operated by Homeaway) listing advertised it as a Belize luxury resort for 14 people, including a chef and transportation in Belize, for over $45k a week. In response, two potential customers wired large sums of money (a week’s rental) as rental deposits. The rentals never materialized. The customers sued VRBO for the allegedly fraudulent listing. VRBO invoked Section 230 and other defenses.

The plaintiffs claimed VRBO qualified as a “seller of travel services,” which would subject it to heightened regulation. The court disagrees: “HomeAway merely provides a venue for others to sell or provide lodging, but does not provide the actual facility where people can ‘lodge.'” See the uncited SF Housing Rights Committee v. Homeaway ruling. Further, if VRBO did constitute a seller of travel services, Section 230 would apply: “To hold HomeAway liable for misleading or inaccurate material (e.g., images from another property listing appearing on a different HomeAway website being duplicated on the Jewels of Belize rental account) in the third party created Jewels of Belize listing contravenes Section 230 of the CDA.”

To get around Section 230, the plaintiffs invoked VRBO’s “Basic Rental Guarantee,” which provides reimbursement for certain types of fraud (but doesn’t cover direct wire transfers like those at issue here). VRBO denied the reimbursement claim, concluding that the listing came from an authorized property owner and the property actually existed (but apparently had serious problems). The court says VRBO did what it promised to do in the “guarantee.” The fact VRBO used the term “guarantee” (a term I wouldn’t have chosen personally) didn’t convert the reimbursement promise into something more.

As another workaround to Section 230, the plaintiffs argued a “concert of action” theory (basically, that VRBO was in cahoots with the property lister). The court says VRBO’s “concert of action” was publishing the third party listing, even if VRBO “expressly adopted” the listing, so Section 230 applies. This reminded me of the Fields v. Twitter case, plus the old Doe v. MySpace case.

This case adds to the canon of cases where Section 230 has helped platforms and marketplaces avoid liability for fraudulent activity, such as the GiveForward v. Hodges case, which held that a crowdsourcing platform wasn’t liable for a fraudulent listing. Despite Section 230’s immunity, platforms routinely take on additional efforts to increase their customers’ trust, including VRBO’s “guarantee” (though it remains unclear to me how much that guarantee is worth). I’d be surprised if this case didn’t spur VRBO to think even more carefully about what it does to protect its customers from big-ticket losses like this one.

Case citation: Hiam v. Homeaway, 2017 U.S. Dist. LEXIS 117850 (D. Mass. July 27, 2017). The complaint.