When 'Geofencing' Is Not Enough: Airbnb Files Federal Lawsuit Against Miami Beach

Airbnb has been around for a decade now, and regulators are still figuring out how to tame the disruptive beast. In Miami Beach, which has 20,000 hotel rooms to protect, people face fines of $20K for running illegal short-term rentals out of homes and apartments.

A recent attempt to further crack down on such operations has gone too far, Airbnb says, and it has filed a federal lawsuit against the city.

In most residential areas of Miami Beach, it is illegal for landlords to rent out a property for less than six months and one day. In sections of the city where short-term rentals are allowed, operators engaging in such practices must register with the city, and they are supposed to have business licenses and collect resort taxes.

However, compliance has been spotty. According to a Miami Herald report last fall, only 465 properties were registered with the city while listings for 6,100 could be found online. Enforcement can be challenging because the city levies fines by placing liens on property — a loophole exploited by tenants who rent apartments, then turn around and operate them as short-term rentals, as they can stick the property owner with the punishment while escaping liability themselves. 

In September, the Miami Beach City Commission passed a law that tried to put the onus for compliance on the rental platforms like Airbnb and HomeAway. It required platforms to only show listings that included the property's business license and resort tax registration number — proof that the property was registered with the city. The platforms would be punished with fines for noncompliance: $1K for first offenses and up to $5K for additional ones. 

According to a lawsuit filed Friday by Airbnb, the ordinance allows for companies to be exempt from the new law if they voluntary incorporate "geofencing": using computer mapping to block out properties located in areas where short-term rentals are illegal. 

"If any of these platforms want to be good corporate citizens and simply say, 'Hey, we’re not going to rent in areas where it’s not legal there for someone to be,' this gives them an avenue by which they can show good faith," the lawsuit quotes Mayor Dan Gelber as having said in September. "They can geocode out those addresses and those areas, and if they do that, even if somebody finds a way to get around all that, they will, it’s almost a hold-harmless, safe-harbor provision ..."

Airbnb argues that the federal Communications Decency Act and related case law largely shields websites from being liable for content posted by users. Still, Airbnb reached out to the city to say that it would voluntarily incorporate geofencing.

According to the lawsuit, the city then said it would require both content policing and geofencing.

"This interpretation caught Airbnb by surprise," the lawsuit states. "[The city] threatened Airbnb with immediate enforcement of other provisions of the Ordinance that are preempted by federal law and violate the U.S. and Florida Constitutions. In so doing, the City is acting unlawfully twice over: it misinterprets its own Ordinance to close off an express safe harbor, and it threatens Airbnb with costly fines under the illegal Content Policing provisions of the Ordinance. As a result, Airbnb is left with no choice but to file this lawsuit."