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Airbnb's 15,000 'Landlords' in New York Face Scrutiny From Prosecutors

Airbnb’s legal troubles continue to mount in New York with an acknowledgment Monday that the state’s attorney general has subpoenaed the startup for information about all 15,000 people who rent out spaces through the website. In many cases, renting out space in apartments for short amounts of time violates state hotel laws.

Airbnb says it won’t hand over the information. “We always want to work with governments to make the Airbnb community stronger, but at this point, this demand is unreasonably broad and we will fight it with everything we’ve got,” David Hantman, the company’s global public policy director, wrote in a blog post. Still, news of the subpoena alone could pose a huge problem for the company: hosts will be much less likely to use a service if they’re vulnerable to legal crackdowns. Even the fear of fines could push down housing supplies and dampen enthusiasm for Airbnb in its most important market.

New York Attorney General Eric Schneiderman is interested only in an “incredibly small number of bad actors who abuse the Airbnb platform,” according to Hantman’s post. But much of the activity that the site facilitates could be illegal under a 2010 law prohibits renting out space in residential buildings for less than 30 days, unless a permanent resident is present. Airbnb claims that only 13 percent of hosts in New York don’t live in the place they offer for rent, but the company doesn’t disclose the proportion of those hosts who actually continue to live in an apartment while guests are staying there.

Hantman also says that the authors of the state’s law on illegal hotels don’t think it should apply to “ordinary, everyday people who occasionally share their homes.” While this may be true, Liz Krueger, the state senator behind that law, is openly hostile to Airbnb and doesn’t see the rentals on its site as harmless hospitality. She argues that neighbors shouldn’t have to worry about the apartment next door turning into a de facto hotel room occupied by a rotating cast of strangers.

Airbnb has been trying to head off this crisis for awhile. It recently celebrated a victory in administrative court for one man who was fined for renting out space in his apartment, and last week offered some concessions as it tries to get a friendlier law in place. But a wide-ranging investigation by the attorney general is likely the biggest threat it has faced in New York so far.