FTC, Colorado Sue Greystar For Deceiving Tenants On Rent Prices

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The FTC and state of Colorado has sued Greystar for deceiving tenants over rent prices and mandatory fees and monthly rent costs

The Federal Trade Commission and the state of Colorado have sued Greystar, the largest multifamily operator in the United States, for deceiving tenants ”about monthly rent costs by tacking on numerous mandatory hidden fees on top of advertised prices,” according to a release.

Since at least 2019 Greystar has “used deceptive advertising to entice consumers into applying for rental housing, and then bilked those consumers out of hundreds of millions of dollars by charging “hidden fees” (mandatory, fixed fees that are not included in the advertised price) for itself and its landlord clients,” according to the complaint filed in federal court in Colorado.

“Greystar is responsible for advertising available units at the properties it manages. Greystar is also responsible for finding qualified tenants to apply for available units. After a unit is filled, Greystar communicates with and collects the rent and hidden fees from the tenant on behalf of the owner.

“Greystar advertises its available apartments widely. Greystar knows that price is the most important factor for the majority of consumers searching for an apartment, and the rental price is a key aspect of Greystar’s apartment listings. Despite this, Greystar consistently omits various mandatory fees from the advertised price. Simply put, consumers cannot lease a Greystar-managed apartment by paying only the advertised price,” the complaint says.

“The FTC is suing Greystar for deceptively advertising low monthly rents only to later saddle tenants with hundreds of dollars of hidden junk fees,” said FTC Chair Lina M. Khan in the release.

“The FTC should continue its work taking on corporate landlords that use illegal tactics to jack up rent, exploit tenants, and deprive Americans of safe and affordable housing.”

Colorado Attorney General Phil Weiser said, “Because of Greystar’s deceptive advertising and hidden fees, tenants are on the hook in their lease for hundreds, if not thousands, of dollars more than they anticipated that their apartment would cost.

“Through their actions, Greystar is thwarting apartment hunters from comparison shopping and choosing a home that fits within their budget. To the extent that other corporate landlords are not advertising their all-in pricing and are engaging in similar tactics, they are on notice that such conduct is illegal and will not be tolerated in Colorado,” Weiser said in the release.

Greystar says on their website they have more than a million multifamily units and student beds under their management.  For example, in Portland, Ore., Greystar manages more than 18,000 units, according to the Portland Business Journal.

How the fees work in the leasing process

Greystar’s hidden fees allegedly range from tens to hundreds of dollars a month, which add up substantially over the course of a tenant’s lease. Among the fees noted in the complaint are “valet trash” fees, package-handling fees, utility fees, fees to distribute utility bills, “verification fees” when consumers use non-Greystar-provided renters’ insurance, and media/smart home packages, among numerous others. The FTC and Colorado say in the release that tenants cannot opt out of these fees even if they do not want or use the related services.

In many instances, tenants who saw an advertisement for a Greystar apartment had no way to learn about these hidden fees until after they filled out inquiry forms with their personal information or clicked through small-print hyperlinks, according to the complaint.

The complaint also explains that Greystar, in some cases, waited to reveal fees until after consumers had paid a substantial application fee or holding deposit, and then only deep in a 40- to 60-page lease agreement. The complaint further charges that if consumers discover the existence of the fees after their application is approved and choose not to sign the lease, Greystar does not refund the application fees or holding deposits they paid, which can be hundreds of dollars.

The complaint cites multiple examples of Greystar-managed properties where its advertisements on third-party real-estate listing sites, like Zillow, failed to list the company’s mandatory fees, despite those sites having a specific “fees” section where the company does list optional fees like those for parking or pets. According to the complaint, even on websites Greystar operated, apartment listings did not include information about mandatory fees, even where optional fees were listed.

The complaint charges that Greystar and a number of its subsidiaries violated the FTC Act, the Gramm-Leach-Bliley Act, and the Colorado Consumer Protection Act.

The commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Colorado

The commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the commission that a proceeding is in the public interest. The case will be decided by the court.

Read the full press release here.

Read the complaint filed in federal district court here.

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