Today, a state judge in Albany, New York is set to hear arguments from Airbnb Inc over the request made by New York Attorney General Eric Schneiderman for information about the alternative rental service's users. The request is part of a probe on the San Francisco-based technology business for potential violations to state housing and occupancy tax laws, Bloomberg reported. Airbnb has said that the information request was a government-backed fishing expedition.

The current law in New York prohibits the establishment and operation of illegal hotels. Moreover, the statute also prohibits residents from renting out their entire homes for less than 30 days. According to an affidavit filed with the court by director of research and analysis Sumanta Ray for the attorney general's investor protection bureau yesterday, over 60% of the New York listings on Airbnb on January 31 appeared to have violated the state law, with some hosts offering up to 80 multiple properties.

Spokesman Matt Mittenthal for Schneiderman said in a statement yesterday, "Airbnb is simply looking out for its bottom line at the expense of a law that protects quality of life for building residents and safety for tourists. (Airbnb has resorted to) name calling and public relations to confuse the issue."

Advocates of Airbnb had reportedly called the probe by the state attorney general unwarranted and unjust. Internet Association President and CEO Michael Beckerman said, "Airbnb generates positive economic returns for cities around the world, adds millions of dollars to local economies, and brings more people to New York. Airbnb should be welcomed by business and government leaders hungry for a boost in local tourism, not pushed out by politicians seeking to protect incumbents and special interests."

On the other hand, Bloomberg said housing advocates and tenant groups are blaming Airbnb for the increasing rental fees due to the illegal hotels.

Head of global public policy David Hantman for Airbnb downplayed its company's success, and said in a statement on the Airbnb site that majority of its hosts are regular people renting out their homes to travelers and that it is aiming to collect and remit taxes under state law.