Blueground Lawsuit: Price Gouging and $1.2M Settlement

The Blueground lawsuit was a civil enforcement action filed by the Los Angeles City Attorney in February 2025 accusing the furnished-rental company of illegally raising rents on Los Angeles apartments after the January 2025 Palisades and Eaton wildfires, and it ended in May 2026 with Blueground agreeing to pay $1.2 million and refund overcharged renters.¹

City Attorney Hydee Feldstein Soto filed the case on February 4, 2025, in Los Angeles Superior Court as People of the State of California v. Blueground US, Inc., Case No. 25STCV02951.² Governor Gavin Newsom had declared a state of emergency on January 7, 2025, after fires that destroyed more than 16,000 structures and forced over 100,000 residents to evacuate.³

What Blueground Was Accused of Doing

The city alleged that Blueground raised rents on furnished apartments by anywhere from 10% to more than 50% while displaced residents were searching for housing. Prosecutors said they identified the increases through public rental listings, including on Zillow, where Blueground had roughly 210 Los Angeles properties listed in late January 2025.³

The complaint pointed to specific units across the company’s Los Angeles portfolio of about 200 properties:

A unit at 354 South Spring Street in Downtown LA went from $2,000 on December 31, 2024, to $3,120 on January 7, 2025, a 56% jump. It was later reduced to $2,730, still 36.5% above the pre-emergency price.²
A second unit at the same Spring Street address rose from $4,140 to $5,400 between December 31 and January 10, a 30.4% increase.²
A North Hollywood unit at 10734 Bloomfield Street went from $3,980 to $4,800 by January 10, up 20.6%.⁴
A Valley Village unit at 12501 Sapphire Place increased from $4,370 to $4,940, a 13% rise.²
A unit at 4227 McLaughlin Avenue was advertised at $4,680 for a one-month lease on February 17, 2025, 26.5% above its last pre-emergency price of $3,700.²

The suit claimed violations of California Penal Code Section 396, the state’s price-gouging statute, California’s unfair competition law, and the City of Los Angeles Rent Stabilization Ordinance.¹ Feldstein Soto said when the case was filed, “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.”³

How Blueground Responded

Blueground denied the allegations. CEO and co-founder Alex Chatzieleftheriou said the company operates in full compliance with California law and that its team had worked diligently to comply with the anti-gouging statute from the moment the emergency was declared. The company said the prices the city pointed to were either listings for future dates outside the emergency period or seasonal rates for peak travel periods that the restrictions did not cover.³

The Settlement Terms

On May 18, 2026, roughly fifteen months after the case was filed, Blueground agreed to pay $1.2 million: $1 million to the City of Los Angeles and $200,000 to Los Angeles County. Half of the total is due by November 6, 2026, and the balance by May 7, 2027.¹

Blueground also agreed to refund the specific renters the city identified as having been overcharged. The settlement was awaiting approval by the Los Angeles Superior Court when it was announced.¹

The company said the deal does not amount to an admission of wrongdoing and that it settled to avoid “costly and prolonged litigation.” Feldstein Soto’s office characterized the outcome differently, saying the suit alleged Blueground “not only violated the law, but preyed on vulnerable individuals who had already lost so much.”¹

The Law Behind the Case

California Penal Code Section 396 bars raising prices on essential goods, services, and housing by more than 10% after a governor’s declared state of emergency. For rental housing, the ceiling applies to both existing and prospective tenants. Violations are misdemeanors carrying up to a year in county jail, fines up to $10,000, or both, and they also qualify as unfair business practices, which opens the door to civil penalties, injunctions, and restitution.⁵

The rental protection normally runs for 30 days after a declaration, though it can be extended. For the January 2025 fires, the protections were extended through July 1, 2025.⁶ The statute does not preempt local rent controls, which is why the city also cited the Los Angeles Rent Stabilization Ordinance, covering roughly 624,000 units across the city.⁷

How the Blueground Case Fit Into Post-Fire Enforcement

Reports of price gouging after the fires vastly outnumbered the cases prosecutors actually brought. A volunteer initiative called the Rent Brigade identified more than 5,000 likely instances of rent gouging across 3,553 unique addresses between January 7 and March 16, 2025. As of May 2025, only nine landlords had been charged, and the Los Angeles County District Attorney’s office had filed no cases under Section 396.⁶ The Blueground settlement is one of the few post-fire gouging cases to reach a concrete financial resolution.

A Separate Dispute in Brazil

The Los Angeles case is unrelated to a set of lawsuits filed against Tabas, a mid- to long-term rental operator Blueground acquired in early 2023. Property owners in Brazil alleged that Tabas stopped paying rent, condo fees, and municipal taxes on apartments it leased from them while continuing to sublease the units to guests. One owner, Ami Goldman, told Skift that Tabas had stopped roughly $1,200 in monthly payments on a $300,000 apartment starting around March 2024.⁸ Outcomes of those Brazilian proceedings were not publicly reported.

1
Daily News. Los Angeles Reaches $1.2 Million Settlement With Blueground
2
LA City Attorney. LA City Attorney Hydee Feldstein Soto Files Civil Suit and Criminal Charges to Fight Price Gouging
3
Daily News. VC-Backed Startup Accused of Gouging LA Fire Victims on Rent
4
Claims Journal. LA City Attorney Sues Furnished Apartment Company Over Post-Fire Rent Hikes
5
California Governor’s Office of Emergency Services. Price Gouging
6
Shelterforce. 9 Landlords Charged With Rent Gouging After L.A. Fires, Tenant Advocates Say That’s Just the Tip of the Iceberg
7
Los Angeles Housing Department. What Is Covered Under the RSO
8
Skift. Property Owners File Lawsuits Against Blueground Subsidiary in Brazil