HomeAway.com is on the receiving end of a proposed class action lawsuit that claims the vacation rental website violates its contracts with property owners by acting against them—and in favor of guests—in disputes.
HomeAway.com is on the receiving end of a proposed class action lawsuit that claims the vacation rental website engages in conflicts of interest by acting as an agent for both property owners and guests looking to rent their homes. More specifically, the case alleges HomeAway violates its contracts with property owners by acting against them—and in favor of guests—in disputes, and inflicts unlawful injury by terminating owners’ listing agreements without returning their annual fees.
Behind the lawsuit is a company that says it contracted with HomeAway to list its property on the company’s residential real estate rental website for an annual fee of $750. When a dispute arose between the plaintiff company and a family who leased its property (over a reported furnace malfunction), HomeAway allegedly acted on behalf of the guests, claiming the property was misrepresented. Ultimately, the suit says, the defendant terminated the plaintiff company’s listing agreement and kept the $750 fee.
The plaintiff company argues that HomeAway concealed its “dual agency status” and never disclosed in its contract or advertising materials that it also enters into agreements with guests that allow it to act against the property owner on the guests’ behalf. From the complaint:
“Upon discovery of defendants’ scheme, [the plaintiff] made demand upon defendants to refrain from acting as agent for Guests against [the plaintiff], and to reinstitute defendants’ services on behalf of [the plaintiff], but defendant failed and refuse to do so, thereby substantially injuring [the plaintiff]. Such acts and omissions of defendants constitute a scheme to defraud American consumers for purposes of financial gain, to the great damage of consumers throughout the United States.”
The lawsuit, originally filed in state court over alleged Racketeer Influenced and Corrupt Organizations (RICO) Act claims, was recently removed to the district court for the northern district of Ohio. Vrbo.com, Inc. was also removed as a defendant after HomeAway informed the court that Vrbo had merged with HomeAway in 2010 and no longer existed as a separate entity.