FTC Eyes Rules, Enforcement For Deceptive Rental Fees

The Federal Trade Commission determined it has more work to do following a settlement with landlord Greystar over surprise fees in Colorado.

The agency is launching a process to make a rule regarding unfair or deceptive fees in rental housing, Chairman Andrew Ferguson said in a statement reported by Bisnow. The sector was excluded from a larger rule established a year ago to ban junk fees from markets such as short-term lodging and event ticketing.

In a blog post this week, the FTC warned landlords that marketing a rental price excluding mandatory charges is against the law. The agency told operators to “advertise the total cost of renting your unit up front,” rather than the common disclosure at the lease agreement stage.

“Consumers shouldn’t have to wait until they sign a lease or get their first month’s bill to learn what it will actually cost to live in a rental,” the FTC stated.

The agency directly addressed 13 landlords in letters sent this week, where it cited property management software as preventing owners from properly disclosing monthly rental prices, including mandatory feeds.

““We are monitoring the marketplace for potentially deceptive or unfair acts or practices relating to the marketing and advertising of rental housing and will take additional action as warranted,” the letters conclude,” the letters say.

The National Apartment Association and Multifamily Housing Council were among those to work against the inclusion of rental housing in last year’s junk fee rule. But across the board, increased fee transparency is being largely lauded and not just by tenants.

“We continue to advocate for sensible regulation,” said Kevin Donnelly, executive director of the Real Estate Technology & Transformation Center. “Fee transparency is something we all strive for.”

The NAA advised its members to “consult their local counsel with questions related to fee transparency.”

“This will set useful precedent in an industry that has run on information asymmetry and power imbalance for too long,” added Tara Raghuveer, director of the Tenant Union Federation.

Last week, Greystar agreed to pay $24 million to settle a lawsuit from the FTC and the state of Colorado that accused the South Carolina-based company of deceiving renters in its properties about rent fees. The FTC will receive $23 million, while Colorado will walk away with $1 million; most of the total settlement will go toward making renters whole with refunds.

Greystar also agreed to change how it discloses potential fees associated with its properties when communicating with renters. The company did not admit to wrongdoing.

The firm manages more than 946,000 units, making it the country’s largest multifamily owner and property manager.

— Holden Walter-Warner