By Robert Burnson | Bloomberg
A venture capital-backed startup illegally jacked up rents for furnished apartments in Los Angeles — more than 50% in one example — after last month’s wildfires that destroyed thousands of homes, the city attorney’s office alleged in a lawsuit.
Blueground US Inc. violated California’s anti-gouging law, which prohibits rent hikes of more than 10% after a state of emergency is issued, City Attorney Hydee Feldstein Soto said in a statement Tuesday.
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“It is not only unconscionable for Blueground to take advantage of Angelenos when they are at their most vulnerable, it is illegal and must stop immediately,” Feldstein Soto said.
Governor Gavin Newsom declared a state of emergency on Jan 7. in response to the fires that rank among the most destructive in state history. The Eaton and Palisades fires killed at least 29 people and destroyed more than 16,000 structures. More than 100,000 Angelenos had to evacuate their homes.
Among examples cited by the city attorney’s office of price-gouging by Blueground, the monthly rent for an apartment in North Hollywood that had been listed for $3,980 on Zillow on Dec. 31 was raised 20.6% to $4,800 on Jan. 10. Rent for a unit in the city’s downtown increased 56% on Jan. 7 before the price was lowered to $2,730 on Jan. 10 — but still 36.5% higher than the last pre-emergency price, Feldstein Soto said.
The potential penalties, to be proved at trial, are estimated to exceed $100,000, according to the lawsuit.
Blueground representatives didn’t immediately respond to phone and email messages seeking comment.
Blueground was founded in 2013 in Athens and offers premium furnished rentals around the world, according to its website. With backing from multiple venture capitalists, it was valued at $750 million in 2021, Bloomberg News reported at the time.
California Attorney General Rob Bonta has also filed price-gouging enforcement actions in the wake of the LA fires.
The case is People of the State of California v. Blueground US Inc., 25STCV02951, California Superior Court (Los Angeles County).
–With assistance from John Gittelsohn.
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