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Airbnb’s Terms of Service Update Raises Security Deposit Questions

Airbnb updating terms 2022

Airbnb has updated its Terms of Service. Everyone will have to accept them starting from April 22, 2022. We looked at the details and most changes are around damages (Arbitration Agreement, dispute resolution, and Damage Claims). Finally, Airbnb makes it clear that it is not its job to collect security deposits. The company never collected them anyway. Now the company also makes it clear the amount paid for damage does not take into account the amount of any security deposit indicated in the Listing.

And yet, this is a great occasion to talk about security deposits on Airbnb. There are actually 3 kinds of security deposits on Airbnb. The most obvious one, the Host-required security deposit, is useless, while the two others are not well-known but way more powerful, Airbnb-required security deposit and offline Airbnb security deposits.

Here is what Airbnb said in its announcement:

“Starting from April 22, 2022, all users who registered their Airbnb account before February 10, 2022 will be asked to review and agree to the updated Terms. You will have to agree to the updated Terms before you can continue to use your account.”

What is Airbnb Changing Exactly?

Airbnb is making changes to its Terms of Service, Payment Terms of Service, Privacy Policy, and Host Damage Protection. As existing Hosts, you must agree to the updated Terms before April 22, 2022. The sooner you brush up on the Terms and act, the better. 

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Now, no one wants to take the time to read through the Terms, so we did it for you. Overall, there isn’t much that is changing in Airbnb’s new Terms, but there are some things that Hosts need to be aware of before you agree to them.

What do Hosts Need to Know?

Airbnb has made changes around arbitration agreements, dispute resolutions, and damage claims, including its language regarding the Airbnb Host Guarantee. 

The main thing Hosts need to understand is that these changes mostly revolve around language. Airbnb changed its language by replacing Airbnb Host Guarantee with Host Damage Protection to match the phrasing they use with AirCover. Host Damage Protection falls under AirCover, which was a replacement for the Airbnb Host Guarantee. No need to panic when you see that the Host Guarantee is gone, it’s just been converted to AirCover.

As for a more specific change in damage claims, the method through which they are made will remain the same, but Airbnb has clarified its language on payment authorization. Most Guests have no clue about this, but Airbnb reserves the right to charge fees from a Damage Claim to the payment method they have on file for you. This applies to both Guests and Hosts. 

What Happened to Security Deposits?

In the updated Terms, Airbnb also makes it clear that it is not its job to collect any and all security deposits associated with any Listings on its site. The term “security deposit” even disappeared from the Terms, so the question needs to be asked: why would Airbnb do that? Are you more exposed to risky reservations?

Before the 2022 Airbnb Terms update

In Airbnb’s previous Terms, the section on Damage Claims was titled “Damage Claims and Security Deposits” and said,

“6.1 If you as a Guest (i) agree to pay the Host in connection with a Damage Claim, or (ii) Airbnb determines that you are responsible for damaging any real or personal property at a Listing pursuant to the Terms, you authorize Airbnb Payments to charge the Payment Method used to make the booking in order to collect any security deposit associated with the Listing, as well as any fees, costs and/or expenses associated with the Damage Claim. If Airbnb Payments is unable to collect from the Payment Method used to make the booking, you agree that Airbnb Payments may charge any other Payment Method on file in your Airbnb account at the time of the Damage Claim (unless you have previously removed the authorization to charge such Payment Method(s)).”

After the 2022 Airbnb Terms update

The same section in the updated Terms is now titled “Damage Claims and Damage Amounts,” reading,

“6.1 If Airbnb determines that you are responsible for Damage Claim amounts, pursuant to the Terms, you authorize Airbnb via Airbnb Payments to charge the Payment Method used to make the booking in order to collect Damage Claim amounts, up to a maximum amount as set by Airbnb that may vary by country/region. If Airbnb via Airbnb Payments is unable to collect from the Payment Method used to make the booking, you agree that Airbnb via Airbnb Payments may charge any other Payment Method on file in your Airbnb account at the time of the Damage Claim (unless you have previously removed the authorization to charge such Payment Method(s)).”

Why remove Security Deposits from this title? Well, it’s because Airbnb never took or even pre-authorized security deposits in the first place. They have a policy where they can put holds on a card for a security deposit and release the hold after the Guest’s stay, but it is an incredibly rare occurrence if it ever really happens at all. 

Since Airbnb has such an extensive Damage Claims department and Resolution Center to handle additional payments from Guests in the event of any damage during a stay, it isn’t necessary for Airbnb to be taking security deposits. Additionally, Airbnb was already able to take money for damage with or without a security deposit. So, getting rid of the security deposits from its Terms doesn’t matter because its practices won’t be changing moving forward.

How Does Airbnb Handle Security Deposits?

Now, just because Airbnb removed the term “security deposit” from its language does not mean that they have completely gotten rid of the practice. Airbnb can still take security deposits if it wishes. In fact, there are actually 3 kinds of security deposits on Airbnb. The most obvious one is useless (Host-required security deposit), while the two others are not well-known but way more powerful. Let’s take a look

1/ Host-required security deposits

Host-required security deposits on Airbnb are one way for Hosts to get a security deposit and they can set their own amount anywhere from $100 to $5,000 USD. They work differently than an Airbnb security deposit because no hold is placed on the card. If a Host decides to do their security deposit through Airbnb, then they must go through the Resolution Center and make a claim for either a partial or the full amount of the security deposit in order to receive the payment. However, there are a couple of catches. The first is that the Guest can reject a Damage Claim and at that point, the matter would be taken to an Airbnb Support Ambassador who will speak with the Guest directly. If the Guest refuses to pay a second time and the Support Ambassador decides not to enforce the payment, the Host won’t receive any portion of the deposit. If the Guest does agree to pay or is forced to by Airbnb, Airbnb actually takes the money first and processes it before releasing it to the Host. Many Hosts don’t like this method for collecting security deposits because of how little control they have, but there is another way to get security deposits paid directly to Hosts without breaking Airbnb’s Terms and Conditions.

2/ Airbnb-required security deposits

This type of security deposit on Airbnb is one that most Hosts don’t even know about. Airbnb could put a security deposit on your Listing and you would never know about it. They calculate the risk they believe is attached to a Listing based on an algorithm, background check, etc. with a cap of $1,000 USD. It is often used by Airbnb as a way to deter certain people from booking certain Listings and they handle everything without telling the Host.

3/ Offline Airbnb security deposits

Hosts can use what is known as an “offline” security deposit, which Guests pay as an extra charge during their Airbnb booking process. If there are no damages during the Guest’s stay, then the Host refunds the amount after. 

This is what it looks like on the host side (if you are software-connect or a hotel operator):

airbnb offline security deposits

There’s what a guest would then read about the offline damage deposit on an Airbnb listing page:

“This property requires a $XYZ security deposit. It will be collected separately by the property prior to your arrival or at check-in.

It is called “offline” because the payments for security deposits are not processed on the Airbnb platform. Not many Hosts know about this because it only started in Spring 2021 and this option is only available for Hosts who are connected to Airbnb through software like OwnerRez and Uplisting. This is actually a contradiction to Airbnb’s Terms because they have and continue to actively discourage Hosts from using this method for collecting security deposits. However, this is the one exception Airbnb makes in order to placate the traditional vacation rentals who have always collected security deposits and other fees. Going offline for security deposits is the safest option for Hosts who wish to have them.

Overall, Airbnb didn’t change much in its Terms. It mostly cleaned up some confusing language to match already-existing policies and programs or getting rid of language it simply no longer needed. Most Hosts should find no issues with accepting the updated Terms when they come into effect on April 22, 2022. And if you are a Host frustrated by Airbnb’s security deposit policies, it is worth it to look into listing on other software to be able to collect the deposits on your own terms.

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Rental Scale-Up

Thibault is the founder of Rental Scale-Up. He owns vacation rentals in St. Barths and Bali. He also leads innovative projects for companies within the vacation rental industry. Feel free to reach out to Thibaut Masson on Linkedin.

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