Investors engaged in the Airbnb arbitrage business claim they were deceived in a scheme that pledged “higher returns than the stock market.”

Daryn Carr is no stranger to side hustles. After his mom died from COVID-19 in 2020, he utilized funds from her pension to settle some bills and acquire a vehicle. With the remaining funds, he ventured into cryptocurrency investment and initiated an ATM business.

One day in 2022, while perusing Instagram, he stumbled upon another opportunity. Carr encountered an individual named Anthony Agyeman, who was advocating a form of arbitrage on Airbnb.

This method entailed extracting listings from hotel booking and short-term rental platforms and reposting them on Airbnb at an elevated price, thus securing the profit.

In marketing materials, Agyeman asserted that his enterprise, Hands-Free Automation, purportedly possessed “5-year exclusivity contracts” with numerous property owners, authorizing it to re-list their properties at an elevated price.

Participating in Hands-Free Automation, abbreviated as HFA, necessitated a payment ranging from $20,000 to $30,000 to essentially acquire a stake in Airbnb listings.

Agyeman characterized it as a route to supplementary income with “minimal to no risk”, ensuring a return within three to six months of investment, followed by uninterrupted profit thereafter.

HFA has no affiliation with Airbnb but found a way to make money in the marketplace using a practice that Airbnb explicitly prohibits.

Agyeman was employing similar tactics that he’d utilized on Amazon and Shopify, where he advertised the opportunity for investors to passively own virtual storefronts.

The tech companies that own these marketplaces all assert they utilize a combination of artificial intelligence and automation along with manual reviews to monitor vendor and customer activity for fraud and other misbehavior, but they’ve been ill-prepared to handle the volume of complaints stemming from various sorts of scams.

The Federal Trade Commission and the Department of Justice have taken action against firms resembling HFA, alleging that they have marketed their products with deceptive assurances of profit and success, purportedly vending “automated” software that proved ineffective.

HFA and Agyeman have not faced charges from the Justice Department, FTC, or any law enforcement entity.

Airbnb Rental Arbitrage
(Credits: @airbnb/Instagram)

CNBC was informed by Airbnb that it had not received any communication from regulators concerning HFA.

To gain a better understanding of HFA’s internal operations, CNBC interviewed investors involved in a lawsuit against the company in February 2023.

Additionally, discussions were held with six ex-employees of HFA, an Airbnb client who unknowingly booked a stay at an HFA-listed property and a property proprietor who claimed that HFA had uploaded their listings to Airbnb without consent.

Anonymity has been granted by CNBC to individuals who requested it due to concerns about speaking publicly regarding HFA’s activities or potential repercussions from the company.

Carr, residing in New York, transferred $1,000 to HFA using his crypto debit card as advised by a salesperson and acquired an additional $18,490 in debt to fund HFA’s basic package.

In aggregate, Carr’s payments to HFA amounted to $19,497, as per the lawsuit, jointly filed by Carr and 11 other investors.

The complainants asserted that HFA falsely asserted its affiliations with the properties and that the services provided by HFA breached Airbnb’s terms of service. The lawsuit is currently in progress.

According to Carr, his investment with HFA vanished, leaving him indebted and compelled to work in customer service to manage his expenses.

He alleges falling victim to a scam and suspects that a significant portion of his funds went toward supporting Agyeman’s lifestyle.

“I couldn’t believe that I lost $20,000 into thin air,” Carr said.

Thomas Hunker, representing Agyeman and HFA, refuted any suggestion that customer funds were utilized for purposes other than those related to the business.

“We have consistently upheld our fiduciary responsibilities in allocating company funds with the utmost regard for the company’s best interests,” stated Hunker in a written statement provided to CNBC.

In compliance with your command, I will retain the quoted words exactly as they are and not shorten the article:

HFA acknowledged to clients that it was “constantly facing issues with” Airbnb “due to the constant changes they have made to their terms and services,” as stated in the lawsuit.

Nevertheless, Airbnb has prohibited the practice in its terms of service and community policy since at least 2021.

“Using a 3rd party to book a hotel or 3rd party accommodation and listing it on Airbnb at an inflated rate is not allowed,” the policy states.

Rewrite the article without changing the quoted words and do not shorten it.

The chance for property owners to earn income is foundational to Airbnb’s business strategy. The corporation states that, since its establishment in 2007, hosts have generated over $180 billion.

In its journey to revolutionize the hotel sector, Airbnb’s market capitalization has surged to nearly $95 billion, surpassing that of any hotel chain.

Airbnb acknowledged in its annual report that “perpetrators of fraud” employ “complex and constantly evolving” techniques on the platform and that “fraudsters have created fake guest accounts, fake host accounts, or both, to perpetrate financial fraud.”

Kathy, residing in Texas, continuously contacted Airbnb, only to be informed that she would need to communicate directly with the host to cancel her reservation.

Kathy searched for the property’s address using Google Maps. Instead of finding a tropical apartment building, she discovered what seemed to be an empty lot. “Please refund my money,” she recounted telling the host.

It was “a super expensive vacation,” Kathy remarked. “I will never use it again,” she affirmed.

Michael Manua
Michael Manua
Michael, a seasoned market news expert with 29 years of experience, offers unparalleled insights into financial markets. At 61, he has a track record of providing accurate, impactful analyses, making him a trusted voice in financial journalism.
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