Airbnb’s Money-Laundering Problem
thedailybeast.com
thedailybeast.com
I mean, the way this works you could literally use any service ever. Why is AirBnB, in this case, any different than like Paypal, eBay, or Amazon or literally any online fund transferring for goods service?
Gig economy companies blur the line between user and employee. If a hotel chain had a problem with its hotel managers laundering money, would you be saying this?
What you're saying here is tantamount to claiming that AirBnB isn't responsible for its employees' actions because they didn't bother to vet their employees. Companies aren't simply exempt from laws because their business model refers to their employees as "users".
The Uber and Airbnb model is more like a credit card gateway for a specific industry and their ideal user is, ‘I’m an individual who does whatever I want with my time and property and I would like to make some money on the side’ that is not an employee’s mindset.
Its a little upsetting that there are people who are more invested in their Airbnb and Uber status therefore claim employee status. If my YouTube channel takes off and I make a bunch of money on views can I claim employee status at yt? Clearly the answer is no
I completely disagree. A company vets and makes a pledge to a employee, there is commitment in the form of promised work and potential advancement. Employees have a work future and maybe the potential grow. Consults, Ehem I mean, "Users" are here now and understand that once they finish this single task in accordance with any contract, or task list they are done. They are free to leave and there is no promise to stay. A company has no responsibility to a user or consultant other than all civil caselaw, don't slander, impersonate, discriminate, stalk, etc. 'For hire' work is compensated on in the agreed upon terms. Something to the extent of "There is no guaranty for future or ongoing work. You are compensated for the services and time you have rendered. Compensation changes must be agreed upon by both parties." 'For hire' contracts, TOS, consultant contracts are not employee contracts.
Your narrative (and Uber's) is that all Uber has to do to abdicate all the responsibilities that society previously demanded from a cab company is declare that they will make their drivers consultants. Obviously Uber drivers as they are now are consultants, but it's far from clear that this is beneficial for riders, drivers, society as a whole, or anyone other than Uber. I am unconvinced that we should accept Uber's narrative and allow them to make their drivers consultants.
That said, your characterization of Uber and such is egregiously inaccurate. Uber does not hire individuals who do whatever they want with their time and property. They hire individuals who are willing to use only very specific property, in very specific age and condition, to make money in specific places, in an exceedingly specific manner, while following very specific rules.
As such, you're not just peddling a false dichotomy, you're doing so using grossly distorted portrayals of reality.
It's generally understood that employees have all the rules you mention. I have been a contractor for 20 years and I have all those rules as well. So when does a consultant become an employee? Is it when I'm a 1099 or a W2 in the eyes of the IRS?
The difference is in the initial negotiation; the benefits and a promise of future work for employees, but no such commitment for consultants. It's negotiated up front and must be renegotiated by both parties for any change. If I'm hired as a consultant, I don't get to claim I'm an employee later on because they worked me too hard. I have been worked too hard, but I know the rules, I made it through what ever the commitment I made, then either renegotiated or fired the client. That's what consultants have to do every day.
How about eBay or Etsy... are people who sell things via those platforms "employees" of the platform? If so, then you have an odd definition of "employee". If not, then where do you draw the distinction?
To put it differently, the story is that this is happening to AirBnB, the fact that happens to others is not important. Not every story is about the fully zoomed out overarching issue.
Because Paypal actually gives a damn about it because they know that they could get seriously compromised through government intervention if they don't police it.
If AirBnB ever wants to be legal, they're going to have to be spotless. This may not be their problem, but it landed in their lap, and they can't be part of it.
It'd be easy if these scammers were total idiots but the problem is scammers will work within any system they're given. So you set the limit to 3 repeat interactions as well as a $250 limit they'll just do 3 transactions at $249 so they don't trip it. Then it'd just interfere with real users who just want to stay in some expensive place and liked where they stayed so they go monthly or something.
The laundering may work outside Russia as well. In another post, a sixth scammer, who is also willing to split the cash 50-50, says they are looking for hosts and “the country does not matter,” their post reads. Another post on a Russian-language forum is looking for EU-based hosts.
1.) they book a night at a cooperating-host with a stolen credit card
2.) host receives payment minus AirBnB fees 2 days later
3.) host transfers amount minus his own cut to criminals
4.) chargeback from CC owner. I'd guess that Airbnb either charges the Host for the chargeback or cancels the entire account. How is this „scalable laundering“?
If the scam is to get money out of stolen CCs and into your pocket, this is theft and fraud. The money isn't laundered if you can trace it back to a stolen credit card.
Money Laundering is taking money that you have, but can't justify having, and giving it a legitimate source. On Airbnb that might be pretending someone is paying lots of money to stay in your apartment. You pay yourself in dirty money. Now your dirty money looks like legitimate Airbnb income.
I'm sure Airbnb have the first kind of fraud. Anyone accepting CCs on the internet has it.
Actual laundering...? Seems likely. Real estate has always been a popular route. The article (like almost anything money laundering related) mixes and matches, so it's impossible to tell.
1.) get "illegal" money from somewhere/anywhere. Create bank accounts under fake names with the "illegal" cash.
2.) host receives payment minus AirBnB fees 2 days later
3.) host transfers amount minus his own cut to criminals
4.) AirBnB never gets notified of anything - it's just another happy customer.
So the problem with this scenario is AirBnB never knows about the problem - so all the "bad" hosts can go on for long times, and you dont need as many accounts; thats where the "scalability" comes in.
In USA, I don't see how this is "scalable" with the stringent "know your customer"[1] laws.
Using a fake drivers license + fake Social Security Number to open a new bank account with a false name is not trivial. Many banks also require a thumb print for identification. The customer's face is also captured on security cameras as he walked through the bank to open the account. All of that can be cross-checked with the FBI.
It seems the preferred method for criminals using banks to wash money is a "shell company" instead of fake personal accounts. E.g. Open a business account for a car washing company or restaurant. But then the criminal has to be careful and make sure his "pattern of deposits" does not raise suspicions. Any unusual banking activity could trigger an investigation for racketeering and money laundering.
For many this can be better than e.g. Stripe because AirBnB supports payouts to far more countries, making it easier to get lots of drop accounts. They even do WU in some countries.
I would also expect AirBnB to be slower to act on chargebacks than Stripe & Co.
I wouldn't expect this to be super scalable, but on the other hand while a few million a month is nothing for AirBnB it is an OK amount even when split across 100 eastern european guys.
This is a bit OT, but I looked up the Airbnb page to see what they accept: https://www.airbnb.com/help/article/126/what-methods-of-paym...
I had thought that the general solution for handling worldwide payments was to use Paypal. How does Airbnb facilitate the handling of all these different kind of payment services? Is it a homegrown solution? Or is it not really a major technical problem for services to implement this on their own?
Second, Airbnb probably eats the cost of the chargeback since this is an online CNP transaction.
Example of money laundering: I have illegitimately earned money, I funnel it through a service which then gives me "clean" money.
I wouldn't say it's money laundering, but I wouldn't say it's not money laundering. Is there a word for where it's kinda-both?
That's for example, why uncut diamonds are so popular - diamond sourcing business is largely a cash business operating in the grey area - dealers act as mixers of currency sell uncut diamonds for $X. The buyer takes the diamond to a jeweler, gets a finished product, sells it to a different jawler for $Y where $Y is 20-40% lower than $X and that $Y is nearly impossible to link to the initial $X.
Carders cannot do this because no one in businesses like this takes credit cards as the transactions simply gets reversed by the issuing bank at which point whoever was the first hop of the transaction gets money crawled back from him/her.
Criminals often do business in cash and can't report it on their income taxes. Money laundering is getting this "dirty" cash safely into a bank account or legal investment without revealing the crimes that caused the accumulation of cash.
In the US, banks are required to "know" their customers. Moving between cash and bank accounts is only possible with an account at the bank and every cash transaction over 10K is reported to the government. Furthermore, traveling with more than 10K into or out of the country requires paperwork to be filed with the government. All of this makes it difficult to use the cash sourced from criminal activity.
AirBnB appears to be an easy way to launder a modest amount of money. Heidi Fleiss was the Hollywood Madam and would have had a "dirty" money problem, not a huge dirty money problem like drug cartels, but nevertheless, lots of cash and no way to explain it to the banks: one million dollars in her first four months[1].
It doesn't seem like AirBnB would be practical for such a large operation; however, think of one of her operatives, they might be able to hide a couple of thousand dollars a week of cash income by pretending to be renting out their place as an AirBnB. The challenge would be on the payment side to AirBnB, setting up enough cards under fake names, etc. because the government also tracks these and would detect any trivial cycles between a set of cards and or people.
The Netflix TV series Ozark, a Breaking Bad kind of show, but staring an accountant rather than a chemist, revolves around this problem.
So you can buy pre-paid VISA debit cards with cash though. Or you could open a fake bank account, put the "illegal" cash there under a false name.
Then "cycle" cash through AirBnB.
Clean cash on the other side in your name.
It is not sometimes that, that is literally the definition of money laundering. Stolen cards have nothing to do with it.
> Please don't insinuate that someone hasn't read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."
In my opinion, OP is actually right. It's not money laundering, but simply carding/stealing.
One of the things I dealt with at Blekko was people clearly trying to use the search engine to find sites with vulnerable (unpatched) Wordpress or Joomla or other storefront frameworks. We spent a lot of time banning IP addresses which were doing that rather than treat them as higher traffic numbers.