Airbnb is in breach of EU consumer rules and deprives consumers of their basic rights, the European Commission has announced.
According to Brussels, the short-term rental website's terms and conditions and the way it presents prices violates the unfair practices directive.
The commissioner for consumer rights, Vera Jourova, has given the company until August to comply or face enforcement action.
She said Airbnb should clarify whether housing is offered by a private individual or a professional, provide clear pricing, and modify its terms of service so that they will be fairer to consumers.
In a statement to Euronews, Airbnb said it was looking into the concerns raised by the European Commission.
“We take this issue seriously and are committed to being as transparent as possible for our community," the company said.
"Guests are made aware of all fees, including service charges and taxes, prior to confirming their decision to book a listing, and we will work together with the authorities to clarify the points raised.”
As it grows in popularity, the company is increasingly in the spotlight. Critics claim the phenomenon is driving up property prices, and Airbnb has been either banned or severely restricted in several European cities.