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Invitation Homes, a company that owns and rents out more than 80,000 homes nationwide, has agreed to pay $48 million and change its allegedly deceptive and anti-competitive business practices as part of a proposed settlement with the Federal Trade Commission, the federal agency announced Tuesday.
The FTC, which with the U.S. Department of Justice enforces the nation’s antitrust laws, filed a complaint against Invitation Homes and its proposed settlement simultaneously on Sept. 24 in the U.S. District Court for the Northern District of Georgia.
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The complaint detailed Invitation Homes’ alleged unlawful actions against renters, including advertising monthly rental rates that did not include mandatory “junk” fees that could add up to more than $1,700 per year; not performing promised inspections before renters moved in and delivering tens of thousands of homes to renters with plumbing, electrical, heating, air conditioning and other issues, such as mold, rodent feces and exposed wiring; and promising “24/7 emergency maintenance” that was “frequently nonexistent” and left tenants with “hazardous” habitability problems such as lack of heat, flooding or sewage back-ups.
The company also allegedly illegally kept security deposits when tenants moved out, charging them for normal wear and tear, damages that existed before they moved in, and renovations. The complaint also alleged Invitation Homes unfairly evicted renters, including during the COVID-19 pandemic, when there were eviction protections in place nationally and at the state level in many states.
Lina Khan. Credit: Pool, Getty Images
“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 a statement.
“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.”
According to the FTC, Invitation Homes’ junk fees, including mandatory “air filter delivery” and “smart home technology” fees, were “highly profitable” for the company, to the tune of $60 million between 2021 and June 2023.
“In 2019, Invitation Homes’ CEO called on the company’s Senior Vice President responsible for overseeing the company’s fee program to ‘juice this hog’ by making the smart home fee mandatory to renters,” the complaint says.
As part of the proposed settlement in the case, Invitation Homes said it neither admitted nor denied any of the allegations in the complaint.
“The agreement contains no admission of wrongdoing by Invitation Homes,” the company said in a press release.
“Invitation Homes believes that its disclosures and practices are industry leading, both among its professional peers as well as the millions of smaller owners of single-family homes for lease.
“Today’s agreement brings the FTC’s three-year investigation to a close and puts this matter behind the Company, which will, as always, move forward with its continuous efforts to better serve its customers and enhance its practices. Invitation Homes remains committed to providing a high-quality living experience for individuals and families who want flexibility and choice in housing and to transparency with all stakeholders.”
The proposed settlement must be approved by the court to go into effect. The deal requires Invitation Homes to pay $48 million to the FTC to be used to provide refunds to consumers allegedly harmed by the company’s actions.
According to the FTC, the agreement also requires Invitation Homes to include all mandatory monthly fees in a home’s advertised rental price and disclose which fees are mandatory or not; to notify renters about federal, state or local programs that help people facing eviction; and to destroy consumer financial data it collected before the settlement with some exceptions, such as if that information is needed for current renters.
The company is also prohibited from withholding security deposits for damages caused by normal wear and tear or to fix damages that were there before the renter moved in or to pay for maintenance, repairs or capital improvements not related to damage caused by the renter. Invitation Homes may also not file evictions against renters who have already moved out and notified the company that they’ve left, unless an eviction proceeding is legally required.
As Khan’s statement suggests, real estate companies are likely to face further enforcement actions.
“Earlier this year, the FTC formed an agency-wide Renters Working Group to examine unfair, deceptive, and anticompetitive practices affecting renters,” the FTC said in its announcement.
“The Commission is holding listening sessions to hear directly from renters, and recently warned that price fixing by algorithm is still price fixing. This is the agency’s first enforcement action since the launch of the group, and it builds on previous housing-related actions like TransUnion, Roomster, Opendoor, and WeTakeSection8.”
In the spring, the FTC started sending checks to tens of thousands of consumers who used Opendoor to sell their homes as part of a $62 million settlement with the iBuyer.
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