Tuesday, September 29, 2015

VRBO vs Airbnb: A Cautionary Tale

While this site is primarily dedicated to wine commentary, reviews, and business, many of its readers invest heavily in traveling to winegrowing regions around the world. These regions are, unsurprisingly, almost exclusively rural farming areas with little industry, and lodging made up primarily of small, family-owned B&B's and expensive boutique hotels. With the proliferation of the sharing economy, many new options in lodging have become available through short-term rental sites such as VRBO and Airbnb. This is very much to the benefit of both property owners and travelers as the spectrum of accommodation options has increased dramatically in just the last five years.  This has made wine country destinations the world over that much more accessible.
Airbnb property (and young pinot noir vines) in the Edna Valley rented by the author.
If you haven't taken advantage of this tremendously positive development yet, I encourage you to. That said, it's worth understanding the difference between these two 800 pound gorilla's on the Internet. 

VRBO (now part of the HomeAway family of companies) was first to dominate the vacation rental space on the internet many years ago.  Founded in 1995, it has been the mainstay advertising outlet for vacation property owners around the world. Rival upstart Airbnb, by contrast, was founded in 2008 and not only allows the listing of exquisite mansions in the hottest of places, but also allows travelers to rent a room (or bed or couch) in someone's home or apartment. This provides a much broader and diverse spectrum of both accommodations, travelers, and, no doubt, experiences (not all positive) as has been widely reported in the media recently.

The two companies also differ in a very significant way to travelers: how payments are processed. VRBO generates revenue by charging annual subscriptions or taking a 10% cut of rentals and provides its advertisers the option to accept credit card payments from travelers. This is not mandatory, however, and payment terms are ultimately up to the property owner.

By contrast, Airbnb charges renters a fee to take a reservation and processes all payments through its website accepting credit cards, PayPal, other secure methods. When a traveler makes a reservation, they pay for it at that time. Airbnb essentially escrows that money until the second day of the traveler's stay. This gives travelers and property owners a level of security to be sure that both the property and the traveler are as advertised.

The primary delta between these two approaches is that Airbnb acts as the trusted third-party to hold funds while a reservation and secured, whereas VRBO basically facilitates the transaction to occur between the traveler in the property owner. Now, there is also another detail worth drawing into focus and which is the crux of the cautionary tale here: bank wire payments.

When payment is made by bank wire, it is an irreversible one-way transaction with very limited visibility to the actual recipient of the funds. Obviously, this carries with it tremendous risk as you will see in the following tale. 

After filtering through literally hundreds of different lodging options for an upcoming trip overseas, I reached out to the property owner of a place (with 43 very positive and detailed reviews) listed on VRBO through the website. I heard back from the property owner in short order and began a lengthy email exchange. My varied and detailed questions were answered thoughtfully and professionally, and a rental agreement was sent to me with an offer for a 15% discount if payment was made in full upfront. (Standard terms for this property are 50% at reservation time and the balance within 30 days of arrival.) 15% is not an incredibly large discount, but when considering a week-long stay, it adds up quickly and was, therefore, tempting enough to accept.  So,

I printed off the rental agreement and shot an email to my bank to get the process of the wire transfer rolling. Reviewing the specific language of the rental agreement, a few peculiar things stood out: in the section that describes the renters insurance coverage, there were several grammatical errors. Since this was an overseas listing, I wrote that off to a language translation issue. There was also the matter of the wire transfer going to a bank in Poland (the property is in Italy). Part of the European Union, Poland is just another country in that free market zone, so I wrote that off, too. To be on the safe side, I reviewed VRBO's security recommendations, which states that renters should contact the property owner by telephone prior to sending money via bank wire.  So,I emailed the property owner asking if I could contact them by telephone, but they told me they could not speak due to having had recent tracheotomy surgery.  Strike three.  This I could not overlook.

I then contacted VRBO's customer service team to determine whether I was dealing with a legitimate person or not. While VRBO is based in Austin, I suspect my phone call was routed to someone at a call center in India. Citing privacy concerns, they would not confirm whether the email address I have been corresponding with belonged to the property lister or not. They were of absolutely no help, and, apparently, did not even send any sort of security warning to the property owner.

Finally, after a number of tries, I dialed the number listed on the property listing and eventually connected with the property owner - a very nice, if initially confused, woman whose English is far better than my Italian. She was shocked to hear that I almost wired money to a someone in Poland. It was clear that her account had been hacked. 

In retelling the story to a handful of people, I have learned that VRBO listings getting hacked is not altogether uncommon.

Does this mean that VRBO is a viper pit of fraudsters?  Not at all.  But prospective renters should be aware of the pitfalls and appropriate countermeasures to prevent from getting duped.  I'm thanking my lucky stars the conspiracy theorist in me was reviewing the paperwork.  Had I not carefully read the rental contract, we would have been out a lot of money - and a place to stay on arriving at our destination.  You don't want to be that person.

 


2 comments:

  1. A good cautionary tale. Thanks for the heads-up.

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    Replies
    1. Hey Paul! Thanks for chiming in. How does one connect with you these days?

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