Short-term rental start-up Blueground illegally jacked up the cost of its listings in Los Angeles by as much as 56 percent last month, city attorney Hydee Feldstein Soto charged in a complaint filed in California Superior Court Monday.
New York-based Blueground uses algorithm-based “dynamic pricing” to set the asking rent on its short-term furnished apartment listings, and the software may have played a role in the price-gauging charges it’s now facing, according to the complaint.
The company denies the charges. A spokesperson for the 13-year-old venture-backed proptech company said the city attorney’s accusations are based on incorrect listings data for rates that actually “referred to dates outside of the state of emergency.”
“Blueground strongly denies the allegations made by the Los Angeles City Attorney,” according to a statement from the spokesperson. “We operate in full compliance with California law, including the ‘Anti-Gouging Law’ that was recently triggered upon the declaration of a state of emergency during a natural disaster.”
Short-term rental companies have stood to see a flurry of new business as more than 100,000 people fled their homes when multiple fires broke out across L.A. County Jan. 7, but the state’s anti-price gauging laws bar increasing rents by more than 10 percent under emergency conditions that went into effect that day. Airbnb responded by offering rooms for free to fire evacuees.
The city attorney alleges Blueground — which offers furnished units to rent for at least 30 days — violated the law by illegally increasing the price of at least 10 listings over the following three weeks, citing listings on Zillow.
In the most egregious example, a Blueground apartment at 354 South Spring Street was listed for $2,000 per month on Dec. 31 and allegedly shot up 56 percent to $3,120 Jan. 7 before dropping back down to $2,730 three days later, still 36 percent above its original asking price.
“It is not only unconscionable for Blueground to take advantage of Angelenos when they are at their most vulnerable, it is illegal and must stop immediately,” Feldstein Soto said in a statement Tuesday.
Blueground operates some 15,000 furnished short-term units across the globe, and had 210 properties available for rent in Los Angeles last month, according to Zillow listing data.
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