Investors in Airbnb arbitrage business allege they were defrauded in scheme promising 'higher returns than the stock market'

Illustration by Elham Ataeiazar

Daryn Carr is not any stranger to facet hustles. After his mother died from Covid in 2020, he used funds from her pension to repay some payments and purchase a automobile. With the remaining cash, he invested in crypto and began an ATM enterprise. 

One day in 2022, whereas scrolling by way of Instagram, he stumbled on one other alternative. Carr discovered a man named Anthony Agyeman, who was selling a sort of arbitrage on Airbnb that concerned taking listings from lodge reserving and short-term rental websites and relisting them on Airbnb at the next value, retaining the revenue. 

Agyeman claimed in advertising and marketing supplies that his enterprise, Hands-Free Automation, had “5-year exclusivity contracts” with hundreds of property homeowners that gave it permission to relist their properties at the next value.

Getting concerned with Hands-Free Automation, or HFA, required a cost of between $20,000 and $30,000 to successfully personal a chunk of Airbnb listings. Agyeman described it as a “minimal to no risk” path to further earnings with a assured return in three to 6 months of funding, “then pure profit after.”   

HFA has no affiliation with Airbnb however discovered a solution to generate profits on {the marketplace} utilizing a observe that Airbnb explicitly prohibits. Agyeman was following related techniques that he’d used on Amazon and Shopify, the place he promoted the chance for traders to passively personal digital storefronts. 

The tech firms that personal these marketplaces all say they use a mixture of synthetic intelligence and automation together with guide opinions to watch vendor and buyer exercise for fraud and different misbehavior, however they have been ill-equipped to take care of the quantity of complaints stemming from varied kinds of scams.

The Federal Trade Commission and the Department of Justice have cracked down on firms much like HFA, accusing them of promoting their merchandise with false guarantees of revenue and success and allegedly promoting “automated” software program that did not work. HFA and Agyeman have not been charged by the Justice Department, FTC or any regulation enforcement company. 

Airbnb informed CNBC it was unaware of any contact from regulators relating to HFA.

For a clearer image of HFA’s internal workings, CNBC spoke with traders in a lawsuit filed towards the corporate in February 2023, in addition to six former HFA workers, an Airbnb buyer who unwittingly stayed at an HFA-listed property, and a property proprietor who stated his listings have been uploaded to Airbnb by HFA with out permission. CNBC has granted anonymity to those that requested it as a result of they weren’t licensed to talk publicly on HFA’s operations, or feared retribution from the corporate.

Brian Chesky, co-founder and CEO of Airbnb, Inc., speaks throughout an interview with CNBC on the ground of the New York Stock Exchange in New York City, May 10, 2023.

Brendan McDermid | Reuters

Carr, who lives in New York, wired HFA $1,000 by way of his crypto debit card on the urging of a salesman and borrowed an extra $18,490 to pay for HFA’s entry-level package deal. In whole, Carr paid HFA $19,497, in line with the lawsuit, which Carr filed together with 11 different traders. The plaintiffs alleged that HFA falsely claimed it had relationships with the properties, and that HFA’s companies violated Airbnb’s phrases of service. The case remains to be continuing. 

Carr informed CNBC that his funding with HFA disappeared, leaving him in debt and dealing a customer support job to make ends meet. He claims he acquired scammed and suspects that a lot of his cash went towards subsidizing Agyeman’s way of life.

“I couldn’t believe that I lost $20,000 into thin air,” Carr stated. 

Thomas Hunker, an legal professional for Agyeman and HFA, denied that buyer cash had been used for something besides the enterprise. 

“We have always honored our fiduciary obligations with respect to allocation of company money in the best interest of the company,” Hunker stated in a written response to CNBC.

‘It’s confirmed and it really works’

HFA admitted to clients that it was “continuously encountering problems with” Airbnb “due to the constant changes they have made to their terms and services,” in line with the lawsuit. 

Plaintiffs within the go well with towards Agyeman and different defendants are asking for no less than $624,000 in damages from their misplaced investments. Meanwhile, the defendants proceed to promote and promote merchandise to potential traders underneath a brand new firm referred to as Wealthway. They’re deploying a crew that goals to generate greater than $3.5 million in month-to-month gross sales, Wessel Botes, a former gross sales worker who left the corporate in November, informed CNBC. 

Hunker stated in an e mail to CNBC that HFA identifies properties to checklist from third-party web sites utilized by motels and different property homeowners to “increase bookings.” That offers HFA “indirect permission” by way of these third-party websites to relist rooms on Airbnb, he stated, including that the bottom value of the reserving goes again to the property proprietor.

However, Airbnb has banned the observe in its phrases of service and group coverage since no less than 2021. 

“Using a 3rd party to book a hotel or 3rd party accommodation and listing it on Airbnb at an inflated rate is not allowed,” the coverage says.  

Airbnb informed CNBC that enterprise practices equivalent to Agyeman’s aren’t permitted. The firm stated it continues to enhance techniques that determine and take away faux or deceptive listings, including that it had blocked greater than 216,000 suspicious listings as of September.

Hunker stated HFA does not have traders, however slightly has purchasers who pay a “flat fee” for an arbitrage service. Yet, HFA says on its LinkedIn web page that it helps “Airbnb investors add 300+ properties to their account without having to purchase the properties.”

Before connecting CNBC along with his legal professional, Agyeman stated in an interview that he wasn’t concerned within the day-to-day operations at HFA and he denied any monetary improprieties. 

Airbnb informed CNBC it had no enterprise relationship with Agyeman and had taken motion to curtail his operations. The firm stated a number of accounts linked to Agyeman and HFA had been eliminated.

The alternative for property homeowners to generate profits is prime to Airbnb’s enterprise mannequin. The firm says that, since its founding in 2007, hosts have made greater than $180 billion. En path to upending the lodge trade, Airbnb’s market cap has swelled to nearly $95 billion, making it larger than any lodge chain.

Airbnb acknowledged in its annual report that “perpetrators of fraud” use “complex and constantly evolving” techniques on the location and that “fraudsters have created fake guest accounts, fake host accounts, or both, to perpetrate financial fraud.”

Agyeman, who began HFA with co-founder Megan Shears, claims to have created proprietary software program that might totally automate the arbitrage course of by trawling the web for properties to relist at a markup. HFA’s workers would care for reserving properties and deal with visitor inquiries and complaints.

Agyeman, 27, lives in Texas, as does Shears, 26, in line with public data. Their social media posts present luxurious trip spots subsequent to screenshots of Airbnb bookings purportedly price hundreds of {dollars}. Several traders stated in courtroom filings that they first discovered about Agyeman and Shears by way of Instagram.

“It’s proven and it works and you get higher returns than the stock market,” one HFA promotional video stated. 

Investors within the lawsuit say in any other case. And some clients who used the service to e-book journey say they misplaced cash and have been left scrambling for a spot to remain.  

In February 2022, a buyer named Kathy booked a beachside Airbnb on Florida’s Sanibel Island for a five-night spring break trip together with her household. Kathy, who spoke provided that CNBC not use her final title, paid $4,600 upfront for what she thought was a “fantastic” poolside one-bedroom residence. CNBC recognized Kathy as an HFA buyer as a result of her title and cellphone quantity have been posted on HFA’s Instagram account. 

Days glided by with out phrase from her host. Kathy, who lives in Texas, repeatedly reached out to Airbnb, however was informed she’d have to have interaction instantly with the host to cancel her reserving.

Kathy regarded up the property’s tackle on Google Maps. Rather than a tropical residence constructing, she noticed what gave the impression to be a vacant lot. “Please refund my money,” she recalled telling the host. 

Desperate to verify she had a spot to remain, Kathy booked a room at a resort in Fort Myers, greater than 40 miles from Sanibel Island. Ultimately, after days of back-and-forth messages, Airbnb refunded about half her cash.

It ended up being “a super expensive vacation,” Kathy stated. “I will never use it again,” she stated of Airbnb.

‘Proprietary relationships’

For Agyeman and Shears, Airbnb was simply certainly one of their stomping grounds. They had an Amazon and Shopify automation enterprise, a trucking enterprise, and a line of vegan gummies. Agyeman additionally helped run a YouTube channel targeted partly on swapping ideas for working a profitable enterprise. 

The duo broke into the arbitrage enterprise in 2020. According to the lawsuit, Agyeman and Shears claimed in advertising and marketing materials that they’d greater than 200,000 properties and had “proprietary relationships with Airbnb and Vrbo,” Expedia’s trip rental web site.

Agyeman relied on freelancers who would take knowledge from different journey reserving websites to make use of on their Airbnb and Vrbo listings, in line with former workers and inner paperwork. An inner coaching video considered by CNBC instructed copywriters on tips on how to recycle the unique listings’ particulars for Airbnb or Vrbo.


HFA stated its software program algorithmically adjusted the worth of a property in response to modifications on the unique itemizing. Agyeman stated on social media that his workers have been “the only ones tapped into Airbnb & Vrbo Arbitrage Automation.” 

One spreadsheet listed 68 totally different purchasers as Airbnb traders. Going no less than way back to July 2022, HFA attracted 120-plus traders who collectively paid near $3 million for “automated” Airbnb, Shopify, or Amazon companies, in line with inner cost monitoring and monetary data reviewed by CNBC.

Carr, who was listed as a property host, stated that when it got here to his expertise with HFA, there was chaos on each side of {the marketplace}. On one event, he stated, he was contacted by the proprietor of a lodge who discovered certainly one of its rooms on Airbnb. Another time, a lady messaged him 30 to 40 occasions when she could not discover her reserving.

“People are going to the hotels saying I got an Airbnb, and they’re like, ‘What are you talking about?’” Carr stated.

Carr and different HFA traders informed CNBC their frustrations have been dismissed or met with authorized threats. But in a letter to traders cited within the lawsuit, HFA conceded that its Airbnb enterprise had been disappointing. 

“Due to Airbnb constant changes we believe this program will take much longer than anticipated to help you our client reach your goals,” HFA wrote.

Still, HFA declined to refund traders’ funds, as an alternative providing them an Amazon or Shopify storefront, in line with the letter and the lawsuit. Hunker stated this was contemplated by the events’ agreements.

Getting properties listed on Airbnb concerned some finagling, as a result of the corporate requires hosts to show possession. To get round Airbnb’s guidelines, HFA instructed its traders to checklist their very own properties, a former worker and two traders informed CNBC. Hunker denies that HFA gave these directions. Once validated as a property proprietor, traders might then add extra listings that HFA would pull from different web sites.

Negative opinions flowed in from sad would-be vacationers, outraged traders and a enterprise proprietor who’d found his property had been listed with out consent.

An HFA investor informed CNBC that one itemizing acquired a remark from a visitor who stated he paid $800 for a motel room that price lower than half that quantity and described it as a “total scam.”

“Host does not own the property,” the reviewer stated, in line with a screenshot of the message seen by CNBC. “It is a standard motel room, no frills.”

On a scorching September day in Las Vegas in 2022, one other visitor confirmed up at an MGM lodge solely to find there was no reservation by way of Airbnb. Neither the visitor nor Airbnb might get in contact with the listed host for hours. Carr, the HFA investor host on document for the property, supplied CNBC with screenshots of the messages.

“I had my family double parked on the Vegas strip for three hours wasting gas while I was running back and forth between the three MGMs in 103 degree weather being told each time after waiting in line that there was no reservation in my name,” the visitor wrote.

Eventually MGM discovered the room had been booked by way of Expedia, which is the place HFA turned after receiving the reservation request on Airbnb.

An Expedia spokesperson declined to remark.

Collin Ballard was shocked in May 2022, when he noticed photographs from his Dallas hostel marketed on Airbnb. Most alarming was the worth: $1,760 an evening vs. his beginning nightly charge of $40.

Collin Ballard discovered a room from his Dallas hostel listed on Airbnb with out his permission.

Collin Ballard

Ballard wrote to the host, telling him he was the proprietor and asking him to take away the itemizing.

“I just figured it was someone scamming,” Ballard stated in an interview, including that he knew nothing about Airbnb arbitrage. 

Ballard stated no person ever responded to his message, however the itemizing was ultimately taken down.

Gains by no means materialized

Airbnb finally eliminated most if not all of HFA’s listings over the course of a number of months in 2022, in line with the lawsuit, although workers and traders informed CNBC they weren’t positive why.

Several traders informed CNBC that they encountered verification issues as a result of it was not possible to show they owned their listings. HFA responded by forging payments or different paperwork with the stolen listings’ tackle, in line with traders, the lawsuit, an HFA coaching video, and a former worker.

If the allegations are true, HFA was sidestepping a key security function. False data could make it tough for Airbnb to reply in an emergency or a state of affairs that requires the involvement of its security crew.

Airbnb informed CNBC that it was rolling out a extra sturdy verification course of within the U.S. and elsewhere starting as early as 2024.

Hunker denied allegations that HFA forges paperwork, and stated Airbnb does not require the lister to be the property proprietor.

By the top of final 12 months, HFA’s traders realized that their promised positive aspects weren’t materializing. Dozens unsuccessfully pressed for refunds of their deposits, in line with a former worker, an inner HFA doc, and the investor lawsuit.

A month after HFA’s then-counsel wrote to 2 dozen traders in January 2023 declining to offer refunds, traders filed their lawsuit, with 22 plaintiffs saying they acquired fewer than 5 bookings every, together with 16 who stated they’d no bookings in any respect. 

Hunker stated HFA might current data exhibiting its purchasers profited from the corporate’s companies on the situation that CNBC signal a nondisclosure settlement. CNBC declined.

Agyeman continues selling his companies on social media. In his Instagram bio, he features a new personal fairness enterprise referred to as OKU Capital. Agyeman is its solely member, in line with Florida state filings and the agency’s LinkedIn profile.

Agyeman’s Wealthway advertises “fully managed,” “automated” trip rental companies with “minimal to no risk.” It’s much like HFA, right down to the branding on its web site.

On its web site, Wealthway has a video showing to point out a gathering between Agyeman and an Airbnb government named David Levine, whose LinkedIn profile says he is Airbnb’s head of API and enterprise partnerships for North America.

“What you guys have been doing at Wealthway is incredible and you guys have been following our partner guidelines,” Levine says within the recording. 

In November, Botes, the previous HFA salesman, grew to become suspicious of the clip and despatched it to Levine in a LinkedIn message.

“That video appears to have been taken out of context and altered,” Levine replied, in line with screenshots of the messages considered by CNBC. “Neither I, nor Airbnb, have any affiliation with Wealth Ways Vacation Rentals.”

Airbnb stated it believes the clip is inauthentic. Levine did not reply to CNBC’s LinkedIn message. Hunker did not reply to a query in regards to the video’s authenticity.

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