Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC charges largest U.S. single-family home landlord with deceiving renters, (Sep 25, 2024)

By Peter Reap, J.D., LL.M.

The company has agreed to pay over $48 million to settle the charges.

The FTC announced that it has filed a complaint in the federal district court in Atlanta against Invitation Homes, the country’s largest landlord of single-family homes, accusing the company of a wide range 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. Invitation Homes has agreed to settle the agency’s charges by entering into a proposed settlement agreement with the agency that requires the company to pay over $48 million for consumer refunds and prohibits it from a number of deceptive and illegal actions in regards to rental prices, security deposits, and evictions, moving forward (FTC v. Invitation Homes Inc., No. 1:24-cv-04280 (N.D. Ga. Sept. 24, 2024)).

According to the complaint, Invitation Homes has used deceptive advertising and unfair practices to charge millions of dollars in junk fees and other bogus amounts that have harmed tens of thousands of people. The company’s advertising touts remodeled homes, streamlined, tenant-friendly procedures, and an overall “worryfree leasing lifestyle.” It promises that its homes are inspected, that residents will receive “24/7 emergency maintenance,” and that residents’ security deposits will be deducted only for damage they cause that is more than ordinary wear and tear.

However, the reality is far different. Invitation Homes hides junk fees in its rental listings, making the actual price of consumers’ monthly lease payments higher than the price the company advertises. Many Invitation Homes properties are in disrepair, have major habitability issues, or are in need of obvious maintenance work when people move in. When move out time comes, security deposits are unfairly withheld for charges that are not their responsibility, including for ordinary wear and tear or pre-existing damage. Invitation Homes has also harmed residents experiencing hardships related to the COVID-19 pandemic, steering them away from obtaining government protections from eviction, the complaint alleges. Rather than address these known issues, all of them well-documented in multiple news reports, Invitation Homes focused on profits, continuing to deceive and harm consumers through its rental practices.

Prices and junk fees. 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.

Promises of home inspections and maintenance. Invitation Homes’ marketing materials promote that every home the company rents passes a “quality assurance inspection” before renters move in and that the company provides “24/7 emergency maintenance.” However, between 2018 and 2023, 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. There were complaints for unclean and moldy houses, broken appliances, rodent feces, and exposed wiring.

Withholding of security deposits. The FTC alleges that the company 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%.

Eviction practices. When the Centers for Disease Control and Prevention (CDC)’s eviction moratorium was in place, Invitation Homes intentionally steered its renters away from filing the CDC declaration required to prevent renters from being evicted, instead encouraging renters to complete the company’s own “Hardship Affidavit” which provided no eviction protection to renters. Invitation Homes even started eviction proceedings against renters who the company knew had already moved out of their houses, which in some cases resulted in eviction filings appearing on tenant screening reports, making it harder for them to rent houses in the future.

Proposed settlement. Invitation Homes would turn over $48 million to the FTC to be used to provide refunds to consumers harmed by the company’s unlawful actions, if the proposed settlement agreement is approved by a court. It would also require Invitation Homes to destroy consumer financial data it collected prior to the settlement 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;

• withholding security deposit money for damages that are part of normal wear and tear;

• using withheld security deposit money to fix issues that were present before the renter moved in or to cover other costs;

• failing to notify consumers about federal, state, or local programs designed to assist people facing eviction; and

• filing evictions against certain renters who have already moved out of their house and notified Invitation Homes of their departure.

FTC’s Renters Working Group. The FTC said it formed an agency-wide Renters Working Group earlier this year to examine unfair, deceptive, and anticompetitive practices affecting renters. This action against Invitation Homes is the agency’s first enforcement action since the launch of the group, and it builds on previous housing-related actions by the FTC against TransUnion, Roomster, Opendoor, and WeTakeSection8. The agency added that it is holding listening sessions to hear directly from renters, and recently warned that price fixing by algorithm is still price fixing.

Commissioner vote and statements. The Commission vote authorizing the staff to file the complaint and stipulated final order was 5-0.

Commissioner Ferguson issued a concurring and dissenting statement arguing that “the complaint goes too far and in Count VI purports to impose liability for failure to comply with the flagrantly unlawful Center for the Disease Control and Prevention (“CDC”) eviction moratorium.” In her concurring statement, Commissioner Holyoak agreed with Ferguson that “[b]y including allegations in the complaint relating to the eviction moratorium, I fear that the Commission may give the appearance that it is seeking to re-legitimize the unlawful moratorium through Section 5 nearly three years after the highest court of the land settled this issue.” She agreed with Ferguson that the complaint should not have included those allegations.

Attorneys: Michael A. Boutros for the FTC. Melinda Haag (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Invitation Homes Inc.

Companies: Invitation Homes Inc.

News: ConsumerProtection FederalTradeCommissionNews