[Exclusive] Court Rules Business Posting False Accommodation Info on Airbnb Must Pay Compensation

Reversing the First Trial Verdict, Recognizing Liability for Damages Due to Illegal Acts
10 People Stayed at Accommodation Reserved for 4... Deceptive Acts and Mental Damages Acknowledged

Seoul Central District Court, Seocho-dong, Seoul.
[Photo by Yonhap News]

[Asia Economy Reporter Choi Seok-jin] A court ruling has recognized the liability for compensation for emotional damages to the contracting party against a business operator who posted accommodations without rental rights on lodging sharing sites such as Airbnb and HomeAway and concluded contracts.

According to the legal community on the 1st, the 2-3 Civil Division of the Seoul Central District Court (Presiding Judges Kim Yong-han, No Tae-heon, Kim Chang-hyun) recently ruled partially in favor of the plaintiff, Korean-American resident Gu, who filed a damages claim lawsuit against Lee and Lee's mother Jung, who operate lodging services using lodging sharing sites in Busan, ordering "the defendants to jointly pay 300,000 won and interest thereon."

The court stated, "The defendants did not have the authority to rent the room on the 14th floor from the beginning but deliberately prioritized reservations for a popular accommodation and appeared to have guided the guests to another accommodation on the check-in day," acknowledging the deceptive acts of Lee and others.

It continued, "Even if the accommodation fee was refunded, the plaintiff had to urgently find a new accommodation, causing disruption to the originally planned travel schedule, so it is clearly evident from common experience that the plaintiff suffered mental distress that cannot be compensated by a mere refund of the accommodation fee," and explained, "The defendants have an obligation to pay compensation for emotional damages to the plaintiff."

Gu, who was living in the United States, booked two rooms on the 12th and 14th floors of Paleteseeds in Jung-dong, Haeundae-gu, Busan, posted by Lee on lodging sharing sites Airbnb and HomeAway in March 2017, for a total of 12 people including family members and the mother's friends traveling together to Busan.

However, when Gu and the group arrived in Busan on July 30 of the same year and tried to check in, Lee and Jung said that while the room on the 12th floor for 4 people could be used, the room on the 14th floor for 8 people was under repair and could not be used, and suggested ▲ going to another accommodation they provided, ▲ all 12 people using the 12th-floor room together, or ▲ canceling all reservations and finding another accommodation.

Ultimately, Gu canceled the reservation for the 14th-floor room, booked a nearby hotel for his mother and her friend, and had to stay with the family of 10 in the 12th-floor room originally planned for 4 people.

Gu and others filed a lawsuit claiming 700,000 to 1,000,000 won each as compensation for emotional damages due to breach of lodging contract obligations or illegal acts (deception).

In the first trial, citing a Supreme Court ruling that "in general cases, mental distress caused by breach of contract is compensated as property damage," the court denied liability for compensation for emotional damages due to breach of contract. It also dismissed the claim for compensation for emotional damages due to illegal acts, citing insufficient evidence to recognize deceptive acts.

However, the second trial court judged that Lee and others deliberately posted a popular accommodation near Haeundae Beach on the site to receive reservations and then guided guests to another accommodation far from the beach on the check-in day, recognizing deceptive acts. However, liability for compensation was recognized only for Gu, who directly concluded the contract.

Attorney Park Jin-sik of the law firm Between, who represented the lawsuit, said, "This case involved a large group of 12 people unable to secure the reserved accommodation, suffering by staying together in one accommodation and ruining their trip, but our courts are excessively stingy in recognizing liability and calculating damages for such everyday damages," and questioned, "If a judge personally went on an overseas trip and had their accommodation reservation canceled by fraudulent means, would they be satisfied with compensation of only 300,000 won?"

This content was produced with the assistance of AI translation services.