NYC Sues Over Alleged $1.3M Airbnb Bait and Switch

New York City has sued a landlord and several associates, saying they used a simple way to get around the city’s short-term rental rules.

According to the lawsuit, they registered listings that appeared legal, then quickly changed them into illegal rentals for entire apartments or larger groups.

The city announced the case on April 16, 2026, and said the operation generated more than $1.3 million between April 2023 and the end of 2025.

The lawsuit centers on fraud, fake profiles, and unsafe spaces

The city says the defendants used false documents and misleading host profiles to get listings approved. In some cases, officials say they used profile photos of people who were not the real hosts. The lawsuit also says some guest spaces were not legal for this type of use and may have created safety risks.

Strict rules sharply reduced New York’s legal short-term rentals

New York’s short-term rental rules are based on a simple idea: apartments should mainly be used as homes, not as hotel rooms. Under the city’s rules, short stays of fewer than 30 days are usually only legal when the permanent resident is present and there are no more than two guests. Booking platforms also cannot process reservations for listings that are not properly registered.

These rules have already changed the market in a major way. Since enforcement began in 2023, the number of legal short-term rentals in the city has dropped sharply.

Why Airbnb is being mentioned

Airbnb is not a defendant in this lawsuit, and city officials say the company is following the verification requirements in Local Law 18. Still, the city says Airbnb could do more. Officials argue that the platform could stop hosts from changing a legal listing into an illegal one after registration, even if current law does not require that step.

A failed 2025 bill showed NYC was not ready to loosen rules

That pressure has been building for some time. In late 2025, a proposal backed by Airbnb that would have relaxed New York City’s short-term rental rules failed to move forward, leaving the current system in place.

The bill would have allowed owners of one- and two-family homes to rent out entire primary residences while away and would have raised the guest limit from two adults to four.

Its failure showed that city officials and lawmakers were still more focused on protecting housing supply than on expanding short-term rental options.

Photo by Zac Ong on Unsplash