A court refused to dismiss the city of Los Angeles’ lawsuit accusing Airbnb of price gouging in the aftermath of the January 2025 wildfires, allowing the case to move forward, officials announced Tuesday.
The lawsuit, filed by City Attorney Hydee Feldstein Soto, alleges Airbnb illegally inflated rental prices for at least 2,600 properties during the state of emergency following the Palisades and Eaton fires.
According to the city attorney’s office, the court found the complaint sufficiently alleges Airbnb violated California’s price gouging law and the Los Angeles Municipal Code by advertising and charging unlawful rental prices during the emergency.
The city contends Airbnb’s “smart pricing” tool allows the company to automatically set, advertise and adjust rental prices based on market demand. Although Airbnb maintains that hosts determine rental prices, the lawsuit alleges the company controls pricing when the feature is activated.
“This ruling confirms that our allegations of wildfire-related price gouging against Airbnb are legally sufficient to move forward in court,” Feldstein Soto said in a statement.
“We look forward to presenting our case as we continue to seek justice for Angelenos who were exploited at their most vulnerable moments,” she added.
The court also ruled the complaint adequately alleges Airbnb falsely or misleadingly represented that host identities and property locations had been verified.
The lawsuit, filed in July 2025, seeks civil penalties, restitution, injunctive relief and other remedies authorized by law.
This litigation is being managed by the Los Angeles City Attorney’s Public Rights Branch.
In a previous statement, Airbnb disputed the allegations.
“In response to the state’s emergency declarations, Airbnb took action to help hosts understand their obligations with respect to price increases in Los Angeles,” Airbnb said. “Hosts who attempt to raise their prices by more than 10% above their pre-emergency rates receive an error message.”
Airbnb also noted that California Attorney General Rob Bonta previously commended the company’s efforts to promote compliance during emergencies.
Airbnb, the world’s largest platform for short-term rentals, reported $11.1 billion in revenue in 2024 and is estimated to hold an 80% share of the Los Angeles market.
The company said its nonprofit, Airbnb.org, has provided free emergency housing to nearly 24,000 people in Los Angeles following the fires.