The Federal Trade Commission has sued Greystar, a global real estate company with rental properties in Atlanta and Georgia, claiming it advertises base rents to consumers without disclosing hidden fees.
According to the civil complaint filed in federal court in Denver, Colorado on Thursday, since at least 2019, the corporate landlord tacked on fees adding hundreds of extra dollars each month to rent, including charges that should be part of basic property management, such as pest control and costs for processing utility bills.
The so-called “junk fees” allow the corporate landlord to advertise deceptively low rents, according to the FTC lawsuit filed with Colorado Attorney General Phil Weiser. Other hidden costs included trash and verification fees and charges for media and smart home packages.
“Through their actions, Greystar is thwarting apartment hunters from comparison shopping and choosing a home that fits within their budget,” Weiser said in a statement.
According to FTC officials, some applicants only found out about the fees after they had paid an application fee or holding deposit, and details about the fees were buried deep in long lease agreements. Applicants couldn’t easily opt out and either had to forgo deposits or application fees, or pay costly lease termination fees, according to the complaint.
Greystar manages more than 800,000 residential rental units across the country and has an ownership interest in more than 100,000 others, according to FTC officials.
Part of its portfolio of rental units is in metro Atlanta and Georgia, including complexes in Midtown, Decatur, Brookhaven, Smyrna, Buckhead, and Alpharetta.
“Rather than working with Greystar to help drive meaningful improvements for consumers in the rental housing industry, the FTC has opted for headline-grabbing litigation in the waning days of the current administration,” Greystar said in a statement. “The complaint is based on gross misrepresentations of the facts and fundamentally flawed legal theories.”
Outgoing FTC Chair Lina Khan, who has roiled business leaders with her enforcement actions, said the agency “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.”
In September, the FTC reached a $48 million settlement with Invitation Homes for charging renters junk fees, withholding security deposits, and unfairly starting eviction proceedings against residents during the COVID-19 pandemic.
The U.S. Department of Justice announced in January it was suing Greystar and five other landlords as part of an expanded civil antitrust case against tech company RealPage over alleged price fixing in the multifamily rental industry.
On Wednesday, the FTC issued a request for public comment for a study of mega single-family rental investors and their impact on home prices and rents in the single-family rental market.
The request defines mega single-family rental investors as those that own more than 1,000 single-family rental homes.
What’s uncertain is how an incoming Trump administration will approach oversight of the rental housing industry and the existing FTC and DOJ actions.
Donald Trump has selected one of the agency’s Republican commissioners, Andrew Ferguson, to head the FTC. He joined the four other commissioners in unanimously approving the decision to file the civil complaint against Greystar.
In December, the federal agency announced a fee rule to make sure that businesses selling live event tickets, hotels, and short-term vacation rentals are upfront with consumers about pricing in advertising. Although the rental housing industry was not included in the rule, the FTC said it reserved the right to take action against other industries on a “case-by-case” basis.
Greystar said it had hoped for FTC guidance on fee disclosures.
“Our view, which the FTC implicitly acknowledges by proposing a rule in the first place, is that the most effective path to achieving uniform and consistent fee disclosures is through clear regulatory guidelines for our industry,” Greystar said.
Ferguson was the only commissioner to vote against the publication of the final rule, arguing that the lame-duck commission should prepare for the transition to a new administration and that “the time for rulemaking by the Biden-Harris FTC is over.”
“The Democratic majority’s four-year regulatory assault on American businesses has hindered economic growth and increased costs to the American consumer,” Ferguson wrote in a dissenting statement.
