Airbnb, government regulation vs the market

[Thailandnotes]

"The Dumbest Person in Your Building Is Passing Out Keys to Your Front Door!"

2nd comment from a Berliner is interesting.

http://nymag.com/news/features/airbn...-9/index7.html

[Chomsky]

Re: Airbnb, government regulation vs the market

Just this week I sent the following email to ProPublica:

Dear ProPublica,

I have an idea for an investigative story: to what extent is Airbnb owned or supported by large commercial RE investors? And are any of the Airbnb principals invested in commercial RE?

My thought: it is possible that large numbers of distressed properties purchased by major banks, hedge funds, etc., in the wake of the Financial Crisis are being rented out by those investors via Airbnb as a way to earn substantially higher (and possibly illegal) short-term rents. Most of Airbnb's activity is centered in major metropolitan areas notorious for their high real estate prices and even higher hotel rates. These are the same areas into which major commercial RE funds have been buying up properties.

Airbnb certainly has huge funding and is waging a very sophisticated PR and legal campaign invoking classic astroturfing themes. This article here notes Airbnb's cleverness in that regard:

http://valleywag.gawker.com/airbnb-is-astroturfing-against-legislation-they-helped-1616026940


There is no question that many homeowners find the prospect of monetizing their property via Airbnb very appetizing. However, I suspect what is driving this train is not a loose coalition of individual homeowners but a cadre of predatory financial concerns profiting off the demise of foreclosed homeowners.



Good luck with the story, if you choose to pursue it.


--

[Woodsman]

Re: Airbnb, government regulation vs the market

Just this week I sent the following email to ProPublica:

Dear ProPublica,

I have an idea for an investigative story: to what extent is Airbnb owned or supported by large commercial RE investors? And are any of the Airbnb principals invested in commercial RE?

My thought: it is possible that large numbers of distressed properties purchased by major banks, hedge funds, etc., in the wake of the Financial Crisis are being rented out by those investors via Airbnb as a way to earn substantially higher (and possibly illegal) short-term rents. Most of Airbnb's activity is centered in major metropolitan areas notorious for their high real estate prices and even higher hotel rates. These are the same areas into which major commercial RE funds have been buying up properties.

Airbnb certainly has huge funding and is waging a very sophisticated PR and legal campaign invoking classic astroturfing themes. This article here notes Airbnb's cleverness in that regard:

http://valleywag.gawker.com/airbnb-is-astroturfing-against-legislation-they-helped-1616026940


There is no question that many homeowners find the prospect of monetizing their property via Airbnb very appetizing. However, I suspect what is driving this train is not a loose coalition of individual homeowners but a cadre of predatory financial concerns profiting off the demise of foreclosed homeowners.



Good luck with the story, if you choose to pursue it.


--

Interesting stuff. Think they'll bite? And is this speculation, hearsay or is there evidence?

I have friends who swear by this service and have traveled up and down Central and South America using it and similar facilities. It's not for me and I can't imagine it's anything more than necessity driving people to become "hosts." I'm sure it's every bit as ghastly as this NSFW short imagines.

[dcarrigg]

Re: Airbnb, government regulation vs the market

You've probably heard it all from me before, but these tech/sharing economy companies all smell illegal/scammy to me.

The first time a paying "guest" gets injured when you let them in your house through this service, what do you think will happen? Where's the liability? I'm sure that nobody using the service carries a homeowner's insurance policy that authorizes short-term commercial room renting like this. They aren't going to pay out, and it's going to fall on the homeowner.

But the bigger question is, what responsibility does AirBnB have here? Some homeowner getting stuck with the bill from a third party renter is absolutely going to bring this to court eventually and make the argument that they are acting as a rental agency who is facilitating and profiting off of uninsured illegal boarding houses. And the day a civil suit like that comes down, poof, the whole business model collapses.

This one is not as bad as Uber, where it's a blatant and obvious car insurance no-no to use your personal auto liability policy for commercial purposes, and they simultaneously misclassify all their employees as independent contractors to get around paying FICA etc. That's a cluster**** of a pile of lawsuits waiting to happen. The 9th Circuit just smacked FedEx down for pulling this, and in some ways they're less egregious than Uber. And there will be accidents, that much is guaranteed. The courts and appeals just move slower than the business expansion.

Chomsky's probably right with the commercial base too. I hadn't even thought of that angle.

But you can't run a multi-billion dollar operation while ignoring all labor and housing and commercial laws and violating insurance policies forever. Eventually this catches up with you.

And it's not even that cutting regulation will solve it. Companies like this are flying in the face of private insurers everyday. Even in a hypothetical world without government, this 'sharing economy' business model would come to a head.

I wish I could rename this threat in that regard.

Because it's not simply "regulation vs. the market."

The way I see it, it's more like "fraudulent vs. legitimate business"

And these are some of the more mainstream, more established ones. There are worse ones that do things like bid up public parking spots for cash and make piles of fake reservations at restaurants every day to ensure you can just 'walk in' somewhere. Or creepy ones like iPhone sexual consent contracts for cash (wat?) Or an equally creepy tech app maid service that actually sends homeless men it recruits in shelters to clean your house for less than minimum wage (paging Charles Dickens).

The whole act of internet "disruption" has run its course. The low-hanging fruit was off that tree by the Nasdaq bust in 2000. Now half of them just appear to be breaking or bending laws and insurance policies to interject themselves into the middle of people's interactions with things that are free or people's interactions with each other. And the only way they make margin is by skirting the law. If they had to comply, the whole model falls apart.

But that's the thing with the law. If you break it a million times a day, it just might catch up with you. Then again, maybe they're betting that if they get rich enough before then, they can just buy everyone off and break it with impunity like the big boys.

We are living in a brave new disruptive world, after all...

[don]

Re: Airbnb, government regulation vs the market

A Liability Risk for Airbnb Hosts

DEC. 5, 2014

Over the last few years, Uber and Airbnb have come to be known as leaders of something called the sharing economy.

Give their founders credit for this feat of mostly misplaced nomenclature. The companies help people sell rides in cars and rent stays in homes; they deserve no more credit for promoting a skill learned in preschool than Marriott or taxi companies.

But here’s one thing they do love to share: risk. Uber grew by heaping it on many drivers, asking them to push damage claims through their personal insurance companies while knowing that those companies did not cover commercial activity.

And now comes Airbnb with its free $1 million liability coverage that will cover the hosts for its tens of thousands of United States listings. How can it afford to provide this for nothing, to everybody? Well, it is “secondary” coverage, which means that it, too, wants hosts to push any claims for guests’ injuries and deaths through hosts’ own insurance companies first.

So how might that work in practice, or would it at all? This week, I sent 17 questions about Airbnb’s move and short-term rentals in general to the biggest home insurance companies in the United States as ranked by SNL Financial. One thing came through loud and clear from the handful of companies that did not dodge my inquiries entirely: Most homeowner’s and renter’s insurance policies do not cover regular commercial activity in the home.

“If you’re conducting a business, on a full- or part-time basis, by renting out your home or apartment (or a room in your home or apartment) as a way to earn money, your homeowner’s or renter’s insurance policy probably would not provide liability coverage,” said Rebecca Hirsch, a USAA spokeswoman, in an email.

Here’s what Oregon’s insurance commissioner had to say to Airbnb hosts in a September consumer advisory statement: “Homeowner policies generally do not provide coverage for business use.”

Insurance companies are not fond of liars either, nor of people who conveniently neglect to tell them that they are running a small-scale hotel. “An insured has the obligation to be forthcoming about all facts relating to his/her insured property. Not doing so could impact coverage and jeopardize the continuation of insurance,” said Laura Strykowski, an Allstate spokeswoman.

So why would Airbnb offer secondary liability coverage at all if it knows that most hosts’ primary insurers frown on their getting into the hosteling business? Three reasons. First, it had to do something, and fast; there’s a new ordinance in San Francisco requiring hosts to have at least $500,000 in liability coverage. Hosts probably would not have gotten their acts together without the company’s help.

Second, it knows that some insurance companies have exceptions of various sorts. Allstate allows people to rent out their home for a week or two while still maintaining liability coverage for people who stay there. Ms. Hirsch of USAA said that for people who “very occasionally rent a room out (as opposed to doing this as a business), liability coverage may be available.” Chubb offers coverage as long as you’re not taking in more than $15,000 a year in rental income, which it believes is more generous than most other insurance companies.

Insurers handle claims on a case-by-case basis. Facts matter. Lawyers get involved and exploit loopholes. Hey, it could all work out well for Airbnb, at least some of the time, right? Clearly, the company thinks it’s worth trying.

The third reason is more basic: It would cost Airbnb enormous amounts of money to offer primary coverage to every host. How much? Well, consider the efforts of its competitor, HomeAway. That company encourages its own hosts to purchase primary coverage for their rental properties, an offering that it refers to as HomeAway Assure.

Scott Wolf, president of the program division for CBIZ Insurance Services, which provides the Assure policy, broke the host’s cost down: For a $1 million, four-bedroom home with contents worth $100,000, the annual cost of coverage would be about $3,000, which includes any damage, liability coverage and replacement of rental income in case the home is temporarily uninhabitable. Most Airbnb properties are worth less than this, its hosts may rent only part of their homes and do so less often, and the company would get a bulk discount if it were to buy coverage for all of them. Still, multiply that times 800,000 listings and it’s easy to see why it’s out of the question for Airbnb to hand out primary coverage to everyone.

So why doesn’t the company do what HomeAway does and offer hosts the option to buy a ready-made primary insurance solution for their renting activities? “We wanted the experience for our hosts to be automatic and easy and offer real peace of mind,” said Jonathan Golden, the Airbnb product leader who has been working on insurance issues for over three years, “versus going to another site and potentially having to purchase another policy.”

Free is indeed appealing to hosts who feel the pain every time Airbnb takes 6 to 12 percent of their revenue as a fee. “I’m pretty happy they’re offering something, given the percentage they’re taking,” said Crystal Bradshaw, who has two listings in Paso Robles, Calif., on the site that she manages with her husband, Justin. (They once hosted me at a different listing in Burbank, Calif.) “At least as a host, I’m getting something back.”

“This makes it more attractive to host from Airbnb,” Mr. Bradshaw added.

So what are the odds that they or anyone else will ever need to use the insurance? One reason it has taken so long for Airbnb to offer liability coverage is that insurance company actuaries aren’t fond of underwriting anything until they have years of data on death, dismemberment, drownings, compound fractures, crushings and the like.

Airbnb shared that data with its underwriters (who are making the company pay an unspecified deductible before any coverage kicks in), but the company would not share it with me. “Over 26 million guests have had a safe and positive experience on Airbnb, including over 16 million in 2014 alone,” Jakob Kerr, an Airbnb spokesman, said in an emailed statement. “We respect our hosts’ and guests’ privacy and do not comment on questions like these.” When I responded that disclosing the raw number of accidental deaths and injuries violates no one’s privacy, he said he did not have anything to add.

Mr. Wolf, the insurance executive, said that he budgeted for $2 million in liability claims each year on the 7,000 rentals he insured through the Assure product. If each of those is occupied 180 nights each year, that means $1 million in claims for every 630,000 nights of occupancy each year. Guests can feel good about those odds. Busy hosts might be less comfortable. Airbnb, with its 800,000 listings at any given time, has more to worry about.

Everyday consumers who neither host nor stay at Airbnb units may think this has nothing to do with them. Chubb, however, sees it differently. If Airbnb succeeds in sharing risk with personal insurance companies, then everyone’s premiums have to rise to cover it. “If you don’t underwrite appropriately, it drives up prices for the average homeowner,” said Christie Alderman, a vice president for Chubb Personal Insurance.

Insurance companies could solve this by asking all policyholders about their hosting habits, but none of the 10 I contacted said that they had made any changes to their policies as home-renting has grown. They should ask.

As for Airbnb’s hosts, they have a few choices. They can simply tell their insurance companies exactly what they’re doing, which is what the insurance companies and Airbnb ask them to do. Mr. Golden of Airbnb said the company did not know what percentage of its hosts were doing so; my educated guess is that it’s a tiny fraction. Or they can buy a vacation home-rental/landlord policy from a company like CBIZ, which offers it on its website.

Option 3 is to cross their fingers and hope that Airbnb’s liability backstop will work as advertised. Those who are tempted by this should keep something in mind: The company that now wants hosts to trust it is also the one that built its business by providing a platform for those same hosts to violate all sorts of local ordinances on short-term lodging all over the world. Some of them got into trouble by doing so.

When a serious injury or death occurs at a host’s home and the host’s homeowner’s policy denies the claim because of the commercial activity the host was engaged in, will Airbnb be there when the lawsuits start flying? We’re about to find out. And it will be a telling test of just how much the company has truly grown up.

Your Money By RON LIEBER

[dcarrigg]

Re: Airbnb, government regulation vs the market

More on the employee misclassification end: TaskRabbit turns wascaly.

...snip...

But the dream turned out to be tougher in reality. This past summer, before Adam started doing his handyman act, TaskRabbit zigged. It’s what Silicon Valley calls a pivot — start-up speak for retooling its business model — and it usually happens for financial reasons. What it meant in practice was a set of severe changes to the system’s mechanics that many of the taskers I spoke to said destroyed much of their freedom.

Overnight, the platform shifted from an open-bidding market — a kind of eBay for jobs — to something much more like a temp agency. Previously, if you needed someone to, say, install a door, you described the job and “rabbits” (the not-exactly-flattering name for workers, which the company has now ditched in favor of “taskers”) would bid on the work. You selected the worker you wanted and they came to do the job. By most accounts it was pretty effective.

Now, however, potential employers enter a four-hour time window, select from one of four main job categories, and enter a description. They then select from a list of taskers whose hourly rates fit the bill, or let TaskRabbit’s algorithm choose one.

Trouble is, this doesn’t mean the tasker wants this particular job, it just means TaskRabbit thinks the tasker wants to do a job in this category and is available. In the past, this wasn’t an issue: Taskers chose which job description to respond to. Now they just get notifications saying they’re needed. They are, effectively, on call.

Tasker Adam W doesn’t mind, because he’s looking for work almost every day. But many loved TaskRabbit because it let them work exactly when and how they wanted. Now they find themselves having to decline jobs they didn’t ask for.

“We don’t have that flexibility,” says Marcel Prather, a veteran D.C.-area tasker. “I’m still able to make money, but it’s a very, very different experience. I wouldn’t have chosen to work with TaskRabbit if they’d started this way originally.”

Marcel’s been on disability for a condition that mostly affects his legs and eyes, and TaskRabbit quickly became his chief source of income. But the changes have left him scrambling to stop getting matched with an extremely arduous job — or at least be sure he’s doing it at the right price. “I’ve set my rates pretty high so I don’t get screwed,” he says. But now he has to set a single rate for everything — which means he misses out on bidding for jobs that would be easier for him to cope with.

He’s not the only one who’s angry. That sense of being your own boss is gone for many. “Anyone left working for TR is an indentured servant,” wrote one commenter on a popular TaskRabbit Facebook group. “I would have used ‘anyone that continues to be a Tasker,’ but that’s not what you are; you are a TR worker. You are not growing your own business, you are growing TR as a business.”

...snip...

Full article @ Medium

These don't sound like "independent contractors" to me. They'd better hope they don't find someone who thinks likewise on the bench when this inevitably hits the courts...

[lakedaemonian]

Re: Airbnb, government regulation vs the market

More on the employee misclassification end: TaskRabbit turns wascaly.


These don't sound like "independent contractors" to me. They'd better hope they don't find someone who thinks likewise on the bench when this inevitably hits the courts...

I've never used this service on either side(nor heard of them), probably because it's probably not available way down here.

I'm surprised there isn't a calendar where "rabbits" can enter specific blocks of hours of the day, days of the week, weeks of the month/year where they are either available or unavailable.

Wouldn't something like that solve the problem?

[lakedaemonian]

Re: Airbnb, government regulation vs the market

But you can't run a multi-billion dollar operation while ignoring all labor and housing and commercial laws and violating insurance policies forever. Eventually this catches up with you.

Have there not been any lawsuits yet? That's surprising. They seem like a juicy target.


The whole act of internet "disruption" has run its course. The low-hanging fruit was off that tree by the Nasdaq bust in 2000.

Do you reckon?

There certainly seems to be some weird "Death of a Salesman meets Bladerunner mixed with some Snowcrash" vibe to things……but doesn't the penetration of cheaper/faster smart phones in the developing world(as well as the developed world) open up new opportunities to disintermediation?

Surely there's a whole lot of under-utilised capacity still around isn't there?


Now half of them just appear to be breaking or bending laws and insurance policies to interject themselves into the middle of people's interactions with things that are free or people's interactions with each other. And the only way they make margin is by skirting the law. If they had to comply, the whole model falls apart.

But that's the thing with the law. If you break it a million times a day, it just might catch up with you. Then again, maybe they're betting that if they get rich enough before then, they can just buy everyone off and break it with impunity like the big boys.

We are living in a brave new disruptive world, after all...

Yeah…I could see some 20 something overeducated, underemployed kid writing the next Kindle book Digital Death of a Salesman blockbuster.

That covers 1…….now for the other millions.

I guess my Dad's generation really was the last of the "job for life" generation.

Now it seems increasingly like the "job for the hour" generation.

High speed digital world libertarianism hitting a physical world crony capitalism immovable object.

[dcarrigg]

Re: Airbnb, government regulation vs the market

Have there not been any lawsuits yet? That's surprising. They seem like a juicy target.

Yup. One just started in Cali. NY too. Plus, Schneiderman in NY's on it from a different angle. I'm sure there are a ton more I don't know about.

Do you reckon?

There certainly seems to be some weird "Death of a Salesman meets Bladerunner mixed with some Snowcrash" vibe to things……but doesn't the penetration of cheaper/faster smart phones in the developing world(as well as the developed world) open up new opportunities to disintermediation?

Surely there's a whole lot of under-utilised capacity still around isn't there?

I'd doubt it. If there were, you'd think that real businesses and entrepreneurs would pop up to fill the capacity. I mean, you can always go and be a handyman. You don't need TaskRabbit taking a 20% cut and dictating your terms and conditions of employment ---err--- being a contractor. You could even put that 20% in a jar and drive it back into advertising. Ditto with Uber. You can just start an illegal cab company and rake in dough in a city. Immigrants do it all the time. You just go to places people typically want rides and hand out phone numbers. The difference is when a multi-billion dollar multi-national company starts running a massive network of illegal cabs with a phone app instead of a phone number...well...we'll see how well that flies over time. The same with shady subletting. Always has gone on. Probably always will. It's the fact that a company can take it over, throw caution, landlords, insurance, and all that to the wind, and take a cut in the middle just for providing a website. I wonder how long it can go on for before the law catches up to them.

Yeah…I could see some 20 something overeducated, underemployed kid writing the next Kindle book Digital Death of a Salesman blockbuster.

That covers 1…….now for the other millions.

I think we're hitting the first crop of kids in college now who have no idea what It's a Wonderful Life is. We're probably due for a little Dickensian-redux. I for one am sick of grittiness and anti-heroes. They were fun, and well needed in the 90s. But it's getting old. I long for some good old fashioned "good guys," rather than "bad guys with a heart of gold."

I guess my Dad's generation really was the last of the "job for life" generation.

Now it seems increasingly like the "job for the hour" generation.

Maybe so. Maybe not the last either. We'll see what the future holds. It kind of depends on whether kids lay down and take it or not.

High speed digital world libertarianism hitting a physical world crony capitalism immovable object.

You ask me, it's all the same dog, just chasing its tail and gnashing its teeth at passers-by.

[dcarrigg]

Re: Airbnb, government regulation vs the market

Not really. I mean, definitions of what an 'employee' is vary state to state. Ditto with definitions of what an 'independent contractor' is. In some places, that might solve it. In others, maybe not.

But it seems to me that if there's a company dictating how you have to advertise, and what jobs you have to take, and all that then it's doing either one of two things:

1) If it's letting you be an independent owner who hires your own employees, albeit with a percentage profit kickback to corporate, and providing you with training, support, and tools, it's franchising, or
2) If it's taking you on board as an individual and ordering you around during specified hours, it's employing.

Either way, I don't see how the independent contractor model fits here. There's no independence. They make you wear a uniform. What type of independent contractor wears a uniform? They make you work. They assign you tasks. They can can you. They can ban you from working for competitors. They rate and evaluate you.

I mean, that sounds a whole lot like an employee to me. Certainly doesn't sound like a bunch of independent young people running their own businesses. And it sounds like the folks running the show just don't want to pay payroll taxes, ui, workman's comp, or any of that jazz. So they call their employees independent contractors. But I think any reasonable judge could look at it and say, no, that's not what these kids are.

[lektrode]

Re: Airbnb, government regulation vs the market

delete... another double post

[lektrode]

Re: Airbnb, government regulation vs the market

....
You ask me, it's all the same dog, just chasing its tail and gnashing its teeth at passers-by.

yeah - another golden slacks mutt with a $40 billion dollar pedigree - for a website and phone app?

when they started to compare its 'valuation' to that of....
time warner ?
HAHAHAHAHAHAHA.....
boy, if that dont tell ya that we're right back to the 'irrationally x.uberant good ole daze'
when AlmostOnLine bought them out ?
cant imagine what would...

dow 20000, here we come (?)

[LorenS]

Re: Airbnb, government regulation vs the market

You've probably heard it all from me before, but these tech/sharing economy companies all smell illegal/scammy to me.

The first time a paying "guest" gets injured when you let them in your house through this service, what do you think will happen? Where's the liability? I'm sure that nobody using the service carries a homeowner's insurance policy that authorizes short-term commercial room renting like this. They aren't going to pay out, and it's going to fall on the homeowner.

But the bigger question is, what responsibility does AirBnB have here? Some homeowner getting stuck with the bill from a third party renter is absolutely going to bring this to court eventually and make the argument that they are acting as a rental agency who is facilitating and profiting off of uninsured illegal boarding houses. And the day a civil suit like that comes down, poof, the whole business model collapses.

This one is not as bad as Uber, where it's a blatant and obvious car insurance no-no to use your personal auto liability policy for commercial purposes, and they simultaneously misclassify all their employees as independent contractors to get around paying FICA etc. That's a cluster**** of a pile of lawsuits waiting to happen. The 9th Circuit just smacked FedEx down for pulling this, and in some ways they're less egregious than Uber. And there will be accidents, that much is guaranteed. The courts and appeals just move slower than the business expansion.

Chomsky's probably right with the commercial base too. I hadn't even thought of that angle.

But you can't run a multi-billion dollar operation while ignoring all labor and housing and commercial laws and violating insurance policies forever. Eventually this catches up with you.

And it's not even that cutting regulation will solve it. Companies like this are flying in the face of private insurers everyday. Even in a hypothetical world without government, this 'sharing economy' business model would come to a head.

I wish I could rename this threat in that regard.

Because it's not simply "regulation vs. the market."

The way I see it, it's more like "fraudulent vs. legitimate business"

And these are some of the more mainstream, more established ones. There are worse ones that do things like bid up public parking spots for cash and make piles of fake reservations at restaurants every day to ensure you can just 'walk in' somewhere. Or creepy ones like iPhone sexual consent contracts for cash (wat?) Or an equally creepy tech app maid service that actually sends homeless men it recruits in shelters to clean your house for less than minimum wage (paging Charles Dickens).

The whole act of internet "disruption" has run its course. The low-hanging fruit was off that tree by the Nasdaq bust in 2000. Now half of them just appear to be breaking or bending laws and insurance policies to interject themselves into the middle of people's interactions with things that are free or people's interactions with each other. And the only way they make margin is by skirting the law. If they had to comply, the whole model falls apart.

But that's the thing with the law. If you break it a million times a day, it just might catch up with you. Then again, maybe they're betting that if they get rich enough before then, they can just buy everyone off and break it with impunity like the big boys.

We are living in a brave new disruptive world, after all...

I'm with you on this one. Markets only work when the participants all play by the same rules, and even better all have a decent moral character. Since we can't count on character we need laws and enforcement. I see enforcement being a bit slow on the uptake with these "new" businesses.

This is not "technology" or "innovation", anymore than a retread is a new tire.

[Rajiv]

Re: Airbnb, government regulation vs the market

Well, Uber is likely going to be banned in India, after its banning in Delhi - Facing national shutdown, Uber blames system; other private radio taxis face heat

Banned in Delhi, facing national shutdown, Uber blames system. Sources said the Union Ministry of Home Affairs is considering issuing an advisory to all states to ban cab-booking services like Uber.
.
.
.
The government said Uber was carrying out its business in contravention of the Motor Vehicle (MV) Act, 1988. The company’s regional manager, NCR, Gagan Bhatia, who was questioned by the police, reportedly admitted that they did not conduct any background checks or police verification of the drivers. “He told us that they do not do any background checks for their drivers. They only rely on the documents submitted by the drivers to the company. They said that they do not even verify their addresses but rely on the addresses on which their bank accounts have been opened. They never check the authenticity of their addresses,” said DCP, North, Madhur Verma. Bhatia reportedly told the police that they provide their drivers with an iPhone 4s which has an Uber application that cannot be deleted. However, if the phone is switched off, the GPS also gets switched off. “He admitted that their cars do not have GPS systems and the GPS only works through their phones. If the phone is off, so is the GPS. There is no way to track the vehicle then. We have registered a case of cheating against them and investigations are on,” said Verma

[don]

Re: Airbnb, government regulation vs the market

The way I see it, it's more like "fraudulent vs. legitimate business"

It appears more cards, moral and otherwise, are marked than many realize . . .

Robot fraudsters account for nearly a quarter of “people” watching online video ads and more than one in 10 display ads, according to the largest investigation to date into the digital advertising industry.

A report released on Tuesday found big-name companies including Ford, Intel, MasterCard and Wendy’s were scammed by online fraudsters, many linked to organised crime, who have hacked the computers of millions worldwide.

White Ops, a New York-based web security investigator which compiled the report for the Association of National Advertisers (ANA), calculates advertisers will lose $6.3bn in 2015 to so-called bot fraudsters.

Bot fraudsters infect unsuspecting computer users with malware – malicious software. Sophisticated botnets mimic the behaviour of online consumers, pausing at ads, watching videos, switching websites and even putting items in shopping carts. This fake traffic is often bought by publishers who are unaware their audience is fake.

The survey monitored 181 online campaigns from 36 companies including Anheuser-Busch InBev, brewer of Budweiser and Stella Artois, Kellogg’s and Nestlé. Some 5.5bn ad impressions were monitored over 60 days. The survey found fraud everywhere and on most of the world’s major websites.

Bots accounted for between 0.3% and 63% of video ad views – leaving an average weighted view of 23%.

Display ads had a weighted average of 11% bots, with a range of 0.8% to 32%.

Most of the activity occurred on real websites. Of the nearly 3m sites covered in the survey, just thousands were completely bogus.

White Ops estimates monetised audiences at those sites were inflated by between 5% and 50%.

Traffic from old web browser Internet Explorer 6 was 58% bot.

The peak activity time for bot fraud was between midnight and 7am.

The ad fraud is far from a victimless crime, said White Ops co-founder Dan Kaminsky. Advertisers lose money, sites that don’t pay for traffic lose revenue and bot hackers are often in the pay of organised crime, with the proceeds funding other more criminal activities. The fraud also leaves those hacked vulnerable to other attacks.

Close to a third of the world’s computers are now infected with some sort of malicious software, or malware, according to the Anti-Phishing Working Group.

Cyber security has often focused on how criminals have targeted people, said Kaminsky, but the better question was, why? “Why are people hacking grandma’s computer? How interesting can her email be? The answer is hack grandma, click a billion ads make a million dollars,” he said. “The scope of ad fraud is the driver for compromising home PCs. This is the big money maker.”

The bot operators run two main types of scam, according to White Ops. In the first they set up fake websites and send fake clicks to them. “The bot traffic looks like legitimate human traffic,” said White Op’s co-founder Michael Tiffany. “You can make your bogus website look popular and pocket a bunch of money.”

White Ops had expected this to be the largest share of the bot scam market. But the survey also found a surprising amount of bot traffic on big-name internet sites. In fact, a quarter of all the bots found in the study were on the world’s top 1,000 websites.

The study found “sourced traffic” – an ad industry term for paid views bought by publishers – was on average 52% bots. “Bot traffic is happening even on premium advertising buys that go to premium websites,” said Tiffany.

Bill Duggan, group executive vice-president of the ANA, said: “The survey confirms a deep, dark fear that people know is out there.” He said publishers might benefit now from higher traffic and higher rates from buying bots but in the long term the industry would suffer. “Digital is supposed to be this great new accountable thing, but if we know it’s not reaching the right people that money is wasted,” he said.

Tiffany said the criminals were following the money and that was why video ads were most vulnerable to bot activity. Video is more expensive than display advertising and is growing fast. Because prices are higher, criminals can make more money with a smaller number of bots. The malware needed is also much more sophisticated.

“Video ads plug into an ecosystem that has been in operation for decades based on TV,” said Kaminsky. “There is a high expectation of volume. How do you get that many people to show up?”

US law enforcement has become increasingly interested in bot activity. In 2011 it closed an Estonia-run operation responsible for more than 4m infected PCs. The operation, known as “Ghost Click”, netted $14m and has led to two guilty pleas so far, with more cases expected.

But so far ad networks and publishers have not shown a concerted effort to tackle the issue. “In this crime when it succeeds, no one notices, in fact the numbers go up,” said Tiffany. “Maybe you even get a bonus.”