Don’t invite an FTC lawsuit: Invitation Homes required to end junk fees and start advertising actual rent amounts

Are you a landlord? Work for a property management company? Or in the rental sector? Here’s a $48 million reminder to obey the law: the FTC’s settlement with Invitation Homes for adding junk fees, steering residents away from eviction protections, making false promises of 24/7 emergency maintenance, and refusing to return security deposits.

With more than 80,000 homes across 16 geographical markets, Invitation Homes is one of the largest single-family home landlords in the country. According to the FTC’s complaint, the corporate landlord engaged in a vast advertising campaign that touted tenant-friendly procedures, remodeled homes, and an overall “worry-free leasing lifestyle.” Invitation Homes’ website and rental listings promised consumers inspected homes, “24/7 emergency maintenance,” and that residents’ security deposits would be deducted only for damage they caused beyond normal wear and tear.

But the reality was starkly different. The FTC says Invitation Homes hid junk fees in its rental listings, making the actual monthly lease payments higher than the advertised price. On move-in day, many of the homes were in disrepair, in need of obvious maintenance work, or had major habitability issues — like raw sewage backup and flooding.

According to the FTC, move-out day wasn’t much better. The FTC claims Invitation Homes unfairly withheld security deposits for charges that residents didn’t owe, including for normal wear and tear and damage that existed before residents moved in. And during the pandemic, the FTC says the company steered residents away from obtaining government protections from evictions, including under the CDC’s eviction moratorium.

In addition to requiring Invitation Homes to pay $48 million, the settlement order prohibits the company from using junk fees and deceptive rental prices. For example, Invitation Homes must advertise the total monthly rent inclusive of all mandatory fees and use fair security deposit practices. The order also prohibits the company from making false promises about the condition of homes or emergency maintenance service; and prevents unfair evictions of residents.

You’ll want to read the detailed allegations of the complaint to see how your company’s practices stack up against Invitation Homes’ — but here are some key takeaways that bear repeating:

• Advertised rental prices should include mandatory fees. Housing costs make up a significant portion of a person’s monthly budget. Make it easy for consumers to budget (and comparison shop) by including all mandatory monthly fees in the advertised rental price and disclosing mandatory fees prominently and using clear language. Don’t bury information in fine print, behind vague hyperlinks, or in dense blocks of legal jargon.
• Avoid misleading claims in advertising, including on websites, platforms, and social media. As a general rule, the FTC Act’s broad prohibition on deceptive or unfair practices applies in the rental market. Objective representations about properties, leasing terms, or services are subject to established FTC truth-in-advertising standards.
• Properly document any charges to consumers. It’s illegal for landlords to charge tenants for ordinary wear and tear, preexisting damage, or for renovations or improvements that go beyond repairing damages they caused. Train your employees on what can be charged to residents and be sure to maintain all necessary documentation justifying any charges against residents’ security deposits.

This case, and a quick review of recent law enforcement actions, demonstrates the FTC’s longstanding commitment to ensuring honest practices in the rental market.