The Federal Trade Commission (FTC) is taking action against Invitation Homes, the country’s largest single-family rental landlord, for deceiving renters about rental costs, according to a release.
The FTC complaint is seeking $48 million for an array of unlawful actions against consumers, including deceiving renters about lease costs, charging undisclosed junk fees, failing to inspect homes before residents moved in, and unfairly withholding tenants’ security deposits when they moved out.
The complaint notes that many news organizations have reported on the problems with Invitation homes. Multiple news articles and investigative reports have documented Invitation Homes’ deceptive and unfair practices, including The New York Times (“A $60 Billion Housing Grab by Wall Street,” March 5, 2020), Reuters (“Spiders, sewage and a flurry of fees – the other side of renting a house from Wall Street,” July 27, 2018), The Atlantic (“When Wall Street is Your Landlord,” February 2019), and The Washington Post (“At Invitation Homes, unpermitted work leaves leaky plumbing, faulty repairs, renters say,” July 12, 2022).
“Invitation Homes, the nation’s largest single-family-home landlord, preyed on tenants through a variety of unfair and deceptive tactics, from saddling people with hidden fees and unjustly withholding security deposits to misleading people about eviction policies during the pandemic and even pursuing eviction proceedings after people had moved out,” said FTC Chair Lina M. Khan in the release.
“No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords. The FTC will continue to use all our tools to protect renters from unlawful business practices.”
The proposed settlement would require Invitation Homes to pay $48 million, advertise true rental prices, and stop other unlawful behavior against renters.
The FTC complaint alleges:
- Invitation Homes advertised monthly rental rates that failed to include mandatory junk fees that could total more than $1,700 yearly.
- Consumers looking for rental houses paid nonrefundable fees—including application fees up to $55 and reservation fees up to $500—based on the deceptively advertised rates.
- Consumers learned that the price would be higher than advertised only when they received a copy of their lease, and sometimes not even until after they signed the lease.
- These undisclosed fees ranged from “services” such as “smart-home” technology and “utility management,” to air-filter delivery and Internet packages.
- Renters could not opt out of paying these fees. Since 2019, Invitation Homes has collected more than $18 million in application fees alone for deceptively priced houses.
“The complaint also points to multiple times the company actively chose not to disclose the fees prior to consumers paying nonrefundable application and reservation fees, despite the company receiving numerous complaints about the fees after renters learned their actual monthly lease prices were higher than advertised,” according to the release.
Maintenance, security deposits and other issues
The FTC complaint also alleges that:
- Residents in 33,328 properties submitted at least one work order within the first week after they moved in for issues including plumbing, electrical, and heating and air-conditioning service requests. In some instances, residents reported houses that were unclean and had mold, broken appliances, rodent feces, or exposed wiring.
- Invitation Homes has systematically withheld renters’ security deposits when they moved out of the company’s houses, including by deceptively and unfairly charging them for normal wear-and-tear, damages that existed before renters moved in, and even renovations.
- Invitation Homes’ security-deposit refund practices were far outside of national norms, with the complaint noting that, between 2020 and 2022, Invitation Homes returned only 39.2% of consumers’ total security deposit dollars collected, compared to the national average of 63.9%.
The settlement details
Under the terms of the proposed settlement, Invitation Homes would be required to turn over $48 million to the FTC to be used to provide refunds to consumers harmed by the company’s unlawful actions.
The settlement also places a number of requirements on Invitation Homes moving forward. The company would be:
- prohibited from deceiving consumers about the true rental price of a house, including a requirement to include all mandatory monthly fees in a house’s advertised rental price and disclose whether listed fees are mandatory;
- prohibited from withholding security-deposit money for damages that are part of normal wear and tear and requiring that any money withheld be used to repair or correct the damage for which it was withheld;
- prohibited from using withheld security-deposit money to fix issues that were present before the renter moved in or to cover the cost of maintenance, repairs, or capital improvements not related to damage caused by a renter;
- required to notify consumers about federal, state, or local programs designed to assist people facing eviction;
- prohibited from filing evictions against certain renters who have already moved out of their house and notified Invitation Homes of their departure.
The settlement, which must be approved by a federal judge before it can go into effect, would also require Invitation Homes to destroy consumer financial data it collected prior to the settlement except under certain conditions, including if that information is needed for current renters.
