WHAT REMEDIES ARE APPROPRIATE?
26 I am satisfied that the Joint Submission proceeds upon a correct understanding of the facts and the applicable legal principles. There is no material issue that requires detailed consideration concerning the declaratory relief and the implementation of a compliance program. As to the former, this is an appropriate case for this Court to express its disapproval of the contravening conduct by making each of the declarations that are sought. This is a serious case involving multiple breaches affecting tens of thousands of consumers by a well-known and easily recognisable corporation. That relief also serves the purpose of publicly vindicating the decision of the ACCC to first investigate and then to commence this proceeding by alleging each aspect of the contravening conduct. It also serves as a public warning to other persons who may be minded to engage in the same or similar conduct.
27 An integral component of the Joint Submission is that a compliance program must be implemented for the purpose of ensuring awareness within Airbnb of its responsibilities in relation to the contravening conduct and the need to be diligent to avoid a repetition of the conduct, or similar or related conduct, in the future. There is in this case a clear relationship between the terms of the compliance program and the contravening conduct: see generally Australian Competition and Consumer Commission v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 at [36]-[38] (Gordon J). I am satisfied that implementation of the compliance program should be ordered pursuant to s 246 of the ACL.
28 The matter which requires more detailed consideration is whether I should accede to the joint position of the parties and impose an aggregate pecuniary penalty of AUD15 million as the appropriate penalty in the circumstances of this case. It should be emphasised that in this case I may only impose pecuniary penalties for the AUD Representation having been made contrary to s 29(1)(i) of the ACL: s 224(1)(ii). The case is not framed by a contention that the Selection Representation attracts a civil penalty. That said, as Ms Brazenor accepted in her oral submissions, I am entitled to take the Selection Representation into account as contextually relevant to the AUD Representation. Self-evidently, if the complaining consumers had not been dealt with dismissively, it is likely that the software malfunction which caused the AUD Representation would have been identified early on. Had that occurred, the scale of the AUD Representation is likely to have been significantly less.
29 Dealing first with the mandatory matters at s 224(2) of the ACL, the first consideration is the nature and extent of the conduct engaged in by Airbnb during the relevant period and any loss or damage suffered as a result. The SAFA in detail sets out the facts concerned with these matters in considerable detail. As noted, I have found in accordance with those facts. The relevant period is approximately 3½ years, commencing on 1 January 2018 and ending on 30 August 2021. That is by any measure a substantial period. The AUD Representation was made to approximately 63,000 affected consumers who used the Platform within that period. Approximately 77,000 reservations were made, though it is not possible to determine how many of those consumers were misled and or suffered financial harm as a result of the AUD Representation. Although the number of bookings made by affected users was approximately 1.6% of the total number of Australian reservations, that statistic tends to mask the scale of the contravening conduct. Rather, it reflects the vast size of the business of Airbnb in Australia in the relevant period.
30 I accept the submission of Mr Borsky for the ACCC that this is a serious case involving tens of thousands of individual contraventions which of itself warrants a substantial penalty. The estimated quantum of the currency differential is approximately AUD16.8 million, which is the best estimate of the total loss suffered by the 63,000 affected consumers. The contravening conduct was widespread, affected many unwitting consumers who were entitled to expect that they would not be misled by a corporation as large and well-known as Airbnb.
31 The seriousness of the AUD Representation was compounded by the Selection Representation made to the sub-group of 2,088 consumers who, upon raising concerns about being overcharged, were further misled by false statements the effect of which was to cast blame for the error onto the consumer. There are multiple examples of this egregious conduct referenced in the SAFA. By way of illustration (and without correcting for grammatical errors):
25 June 2018: What happened is you opted to pay the USD amount of the accommodation and your bank is charging you on your own currency.
28 November 2018: I'm seeing here that the currency you have selected was USD instead of AUD on the payment page of this reservation.
21 February 2021: Guests are always charged in currency they selected at check out. In your case you choose payment in American dollars. You got charged currency conversion fee because the currency you selected on the checkout page is different from the listing's country currency.
32 These patently false statements should not have been made if proper and adequate steps had been taken to investigate the operation of the Platform. I emphasise, however, that the ACCC does not allege that the Selection Representation was a knowingly false statement on any of the individual occasions when made to consumers. Rather, as put by Mr Borsky in oral submissions, the answers provided to consumers were certainly deliberate, but those misrepresentations were not made with knowledge of the true state of affairs. However, as explained, the Selection Representation does not attract any civil penalty.
33 Despite that there is no element of deliberate conduct engaged in by Airbnb to mislead consumers, in my view the real culpability lies in the fact that insufficient procedures and controls were in place from the outset to monitor the Platform to detect technical computer programming glitches in a timely way and to rectify them. After all, Airbnb operates globally - across many countries where consumers do not usually transact business in USD. The culpability then extended to a failure to take adequate steps to investigate the issue once complaints had been received from affected consumers. And there were very many complaints, commencing with 711 between 1 January and 31 December 2018, approximately 610 in each of the calendar years 2019 and 2020 and 155 between 1 January and 30 August 2021.
34 Airbnb is a very substantial global business, with total revenue of USD1.7 billion in 2017, USD2.3 billion in 2018, USD2.9 billion in 2019, USD1.7 billion in 2020 and USD2.8 billion in 2021. The gross revenue received from Australian consumers in the relevant period was approximately USD100 million. Airbnb as a corporate entity of that scale, with the primary business of facilitating peer-to peer rental accommodation services via the Platform, quite clearly had the resources and capacity to implement robust monitoring services to ensure that consumers were not misled as happened in this case. Much more should have been done to ensure compliance with the ACL in the conduct of its business in Australia. What is now known, in consequence of the investigations undertaken primarily by the ACCC, is that the computer malfunction was able to be identified and addressed such that the Platform now clearly displays all prices for Australian accommodation, on all relevant pages, with a currency code that clearly indicates whether the prices are in AUD, USD, or such other currency as selected by the customer, so that informed choices may be made.
35 As to the nature and extent of loss or damage suffered by consumers, as I have explained precise findings cannot be made beyond a broad estimate of approximately 63,000 affected users, who made approximately 77,000 reservations and who may have been misled. Somewhat obviously, there may have been many affected users who realised that they were to be charged in USD, at least by the time that they reached the confirmation and payment page of the Platform. Those persons may have been perfectly content to continue, notwithstanding. What is agreed in the SAFA is that the total value of the price difference is approximately AUD16.8 million plus an unquantifiable potential further financial harm suffered by affected users who incurred transaction fees, that are commonly imposed by financial institutions where goods and services are purchased in Australia in a foreign currency.
36 Balanced against that, is the fact that Airbnb has thus far taken positive but incomplete steps to provide financial compensation to affected users by refunding the full price of the accommodation that they booked. There are approximately 8,000 consumers within this category and the aggregate amount of refunds paid is approximately AUD 9.4 million. For other consumers, there is the consumer redress compensation scheme that must be implemented pursuant to the undertaking given to the ACCC. There is also the question of opportunity loss, being the inability to make an informed purchasing choice.
37 Although there is no precise evidence, I infer it likely that Airbnb gained a financial advantage over its competitors because during the relevant period the exchange rate difference resulted in the appearance of cheaper rates for comparable accommodation through the Platform, when compared with other similar peer-to peer accommodation service providers who, cognisant of their obligations not to engage in misleading conduct, either displayed prices in AUD or, if not, made it clear to consumers that prices were displayed in USD, or some other currency. I infer that a significant number of consumers are likely to have booked accommodation through the Platform, ignorant of the actual price comparison which they were entitled to make if the contravening conduct had not been engaged in.
38 These findings also address the second mandatory consideration: the circumstances in which the contravening conduct occurred. An additional matter that is relevant at this point is the knowledge of senior management of Airbnb, when that knowledge was acquired and what steps were taken to address the contravening conduct. The agreed fact is that the board of Airbnb was aware of "a small number" of the complaints that were made in 2018, by reason of reports that were prepared for and submitted to it between May and September 2018. Quite wrongly, those reports represented to the board that the complaints by consumers resulted from the conduct of the consumers in setting the Platform currency to USD on their devices. The board was not aware of any wider issue until commencement of the ACCC investigation.
39 There had been an earlier compliance issue, the subject of an undertaking given by Airbnb to the ACCC on 12 October 2015 (2015 undertaking), relating to the display of additional cleaning and service fees that were added to the displayed price of a property at a later stage of the booking process. That undertaking required Airbnb to establish a compliance program to address that issue. It is accepted that the currency display issue the subject of this proceeding is not related to the conduct that was the subject of the 2015 undertaking.
40 However, it should not be overlooked that Airbnb simply failed to have in place adequate systems and processes to identify what might have been causing the substantial number of complaints that it received, commencing in 2018.
41 That said, I note that in response to the commencement of this proceeding steps have been taken to improve compliance processes, including the implementation of procedures to 'escalate' ACL consumer complaints to a specialist team, which works in the Asia-Pacific legal team.
42 The third mandatory consideration is whether Airbnb has previously been found to have engaged in any similar contravening conduct. It has not.
43 I next deal with several other discretionary considerations, largely in accordance with the sequence set out in the Joint Submission, which I accept is comprehensive and adequate.
44 Airbnb has not behaved as a recalcitrant in response to the ACCC investigation or this proceeding. As I have noted, documents were produced voluntarily in response to multiple requests from the ACCC and, following commencement of the proceeding, there was very significant cooperation which resulted in an early resolution on agreed facts with appropriate admissions. The result is a very significant saving in the resources of the ACCC, the costs of the proceeding and the resources of this Court. The early acknowledgement of misconduct by Airbnb has been commendable. I accept the submission put for Airbnb that these matters indicate a lower need for specific deterrence, particularly combined with the consumer redress undertaking and with it the scheme to refund affected consumers at an estimated cost of up to AUD15 million. This compensation, however, must not be viewed as some form of additional penalty: it is compensation that is properly payable by Airbnb to affected consumers for loss suffered by reason of the contravening conduct.
45 The need for deterrence is, as I have noted, the primary purpose of a civil penalty for breach of the ACL. This is the matter that I have given most anxious consideration to. The agreed penalty of AUD15 million does not bear a direct mathematical relationship with the USD100 million of gross revenue derived by Airbnb from the supply of peer-to-peer rental accommodation services to users in Australia in the relevant period, because it does not take account of the currency conversion difference. It is therefore necessary that I correct that error which arose in oral argument. Rather, I proceed on the basis that the agreed penalty must be the result of a process of synthesising all relevant considerations: Agreed Penalties Case at [72] (Gageler J).
46 The penalty must be sufficiently large to have a persuasive impact on Airbnb to comply with the ACL in all relevant aspects of the conduct of its business when offering its services to Australian consumers. The provisions in issue establish statutory moral standards that apply to all conduct in trade or commerce with respect to the price for the supply, or possible supply of goods or services. Airbnb must be made to understand that a failure to comply with the statutory norm has consequences, and in this case, they are very serious. As explained in Pattinson at [60]:
Indeed, in some cases, the circumstances of the contravenor may be more significant in terms of the extent of the necessity for deterrence than the circumstances of the contravention. In this regard, it is simply undeniable that, all other things being equal, a greater financial incentive will be necessary to persuade a well-resourced contravenor to abide by the law rather than to adhere to its preferred policy than will be necessary to persuade a poorly resourced contravenor that its unlawful policy preference is not sustainable.
47 The penalty must not be so significant as to be oppressive, which in this case is not an issue as Airbnb agrees to the penalty quantum.
48 As I have noted, steps have been taken to provide partial consumer redress in the form of the compensation payments made thus far and in the undertaking that has been given to the ACCC. This is evidence of contrition and demonstrates an understanding of the impact that the contravening conduct has had on consumers and mitigates the specific deterrence objective.
49 This is a case of multiple contraventions, involving misleading conduct, over an extended period and as I have noted, one cannot simply proceed by determination of an appropriate amount for each individual contravention. The interrelationship between the conduct, factually and legally, permits the contraventions to be grouped and regarded as a single course of conduct for the AUD Representation: Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 262 FCR 243 (Yazaki) at [226]-[236] (Allsop CJ, Middleton and Robertson JJ). As the Joint Submission correctly notes, it is then relevant to consider the course of conduct principle and the totality principle.
50 The course of conduct principle does not operate to group multiple contraventions and treat them as one. In this case, as I have explained, the contravening conduct for the AUD Representation involved many individual acts of contravention that affected a large number of Australian consumers, with significant financial consequences. The course of conduct principle provides support for and is reflected in the total agreed penalty which is not derived mathematically by aggregating the penalty for individual contraventions: Yazaki at [234]-[236].
51 The totality principle operates as a guide to ensure that the penalty is appropriate having regard to the entirety of the contravening conduct: Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 at [62]-[63] (Middleton J). I am persuaded that the agreed penalty in the overall context of the admitted AUD Representation contravening conduct, balanced and weighed with each of the other factors that I have set out does not exceed what is proper.
52 Overall, I am satisfied in the exercise of my discretion to impose pecuniary penalties, that the amount of AUD15 million is appropriate in the circumstances of this case, and not simply because it is the sum agreed to by the ACCC and Airbnb. In isolation it is a very significant amount, and will not be simply regarded as a cost of doing business, but one which I am satisfied provides the appropriate "sting or burden" (Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 262 CLR 157 at [116] (Keane, Nettle and Gordon JJ)) which is appropriate to achieve the objectives of specific deterrence for Airbnb and general deterrence as a warning to other would-be contraveners who may consider engaging in similar conduct.
53 Finally, there is the question of costs. The agreed contribution of $400,000 to reimburse a portion of the costs incurred by the ACCC is entirely appropriate.
54 For these reasons, I make the orders set out above.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine.