PropTech Startup Blueground Accused of Price Gouging During LA Fires

Los Angeles accused rental startup Blueground of price gouging following the city’s wildfires.

City Attorney Hydee Feldstein Soto’s office filed a civil action against the company, alleging it drove up the prices of its rentals by more than 10% and up to more than 50% in some cases, in violation of Los Angeles’ anti-gouging law, according to a Tuesday (Feb. 4) press release. The law is automatically triggered when the city declares a state of emergency during a natural disaster.

“It is not only unconscionable for Blueground to take advantage of Angelenos when they are at their most vulnerable, it is illegal and must stop immediately,” Soto said in the release. “Our prosecutorial offices at the state, county and local levels are united in this effort to fight price gouging and hold accountable individuals and businesses who prey on our residents during this unprecedented emergency.”

Several Blueground rental properties’ prices rose on or after the emergency was declared Jan. 7, per the release. For example, one apartment that had been advertised for $2,000 per month on Dec. 31 was being offered at $3,120 Jan. 7, a 56% increase. The price was reduced to $2,730 days later — still 36.5% above the pre-emergency rent — before the listing was removed from Zillow.

Reached by PYMNTS, Blueground provided the following statement:

“Blueground strongly denies the allegations made by the Los Angeles City Attorney. We operate in full compliance with California law, including the ‘Anti-Gouging Law’ that was recently triggered upon the declaration of a state of emergency during a natural disaster.

“From the moment the State of Emergency was declared, our team has diligently worked to ensure full compliance with California’s Anti-Gouging Law and has continuously monitored our pricing to maintain compliance. It is important to clarify that the Zillow rates mentioned in the complaint referred to dates outside of the State of Emergency. Most of these listings were for future dates, many of which fall during peak travel season, and were not subject to the emergency pricing restrictions.

“We are heartbroken by the devastation caused by the recent wildfires in Los Angeles and the surrounding areas. We are working closely with the City Attorney’s office to provide additional information and to clarify any concerns, and will continue to revisit our pricing model until the housing crisis in LA subsides.”

The city’s suit is asking for a permanent injunction blocking Blueground from charging more than 10% throughout the duration of the current state of emergency, restitution for consumers who were charged illegal rent, and civil penalties, according to the release.

Blueground offers customers fully-furnished turnkey rentals, advertising on its website and sites like Zillow and Airbnb. This sort of housing “could be a desirable option for those who are suddenly and unexpectedly in need of temporary housing,” the release said.

The city also filed criminal charges against a homeowner and her real estate agent for price gouging, accusing them of illegally increasing rent by 38% during the fires, per the release.

The fires’ toll on Los Angeles, both financial and emotional, will be felt for years, presenting another challenge to the state, where insurance companies have been boosting their rates or exiting the market entirely.

“People are going to have to think through how insurance works, where they want to live and how they want to live because the cost of living in certain areas is continuing to increase,” One Inc CEO Ian Drysdale told PYMNTS last month.