It is not true. I got severely penalized for asking Airbnb to cancel a reservation of a guest who broke 3 of my house rules when he/she booked my house. After this cancellation done by Airbnb on my behalf, the Instant Book feature on my account was disabled since October 31st. It is my assumption that there is no such thing as penalty free cancellation. Please see the explanation below.
I had a guest who booked my house at the end of October and broke 3 of my house rules by booking the house. I immediately called Airbnb and addressed this issue. I asked the customer service rep. to cancel this reservation because of this. Before the reservation was cancelled, I double checked with a customer service rep. to make sure that I was not going to be penalized for this cancellation. I was assured that I would not be penalized because the guest broke 3 of my house rules. The customer service rep. told me that the guest would be contacted and the reservation would be cancelled.
The next day, the guest re-booked my house for the same date. I called Airbnb again. This time the customer service rep. told me that the guest's reservation was cancelled and the guest was not informed about the reason of the cancellation. I could not believe that Airbnb would cancel the resercation without ever contacting the guest. I was asked to write to the guest and let the guest know that Airbnb would be cancelling the reservation because the guest broke 3 of my house rules (in my message I explained what rules were broken). I was rerassured agai that I would not be penalized for this cancellation, which Airbnb did on my behalf. Because of Airbnb, this guest's reservation was cancelled twice, and I was penalized for that. Since, this cancellation, my guests can't Instant Book me. They can easily find my listing if they don't use the Instant Book filter, but the moment they turn on the Instant Book filter on, my listing does not show up.
I tried to contact Airbnb numerous times - no answers to my inquires. All my cases were closed within a couple of hours. Tried to call - was hung up twice in the middle of me talking, and when spoke to the manage (my 3rd phone call), he told me to wait for someone to contact me. No one gave me any straight answers.
It is my assumption that hosts will be penalized for any types of cancellation.