FTC, Colorado Sue Greystar Over Apartment Rental ‘Junk Fees’ (2)

Greystarwas sued by the Federal Trade Commission over allegations that the nationwide manager of apartment buildings stuck renters with millions of dollars in hidden fees.

The company collected the “junk fees” dating back to at least 2019, according to the lawsuit filed Thursday in federal court in Colorado. The fees, which range from tens to hundreds of dollars a month, aren’t disclosed to potential renters until after they fill out an inquiry form, or in some cases after they have paid an application fee or holding deposit, according to the lawsuit.

Greystar manages nearly 800,000 apartments, making it by far the largest third-party property manager in the US, according to the National Multifamily Housing Council, a trade group. It also owns a substantial apartment portfolio.

In a statement, Greystar called the FTC’s complaint “regulatory overreach” and said it was willing to agree to display the total monthly leasing price with rent and mandatory fees whenever that was within its control. The company said it currently follows the longstanding, industrywide practice of advertising base rent and said “the idea that this is done with the goal of hiding fees from consumers is patently false.”

According to the complaint, Greystar required renters to pay fees such as $25 per month for valet trash service, $5 per month for pest control and $5.40 per month for utility administration, among others. The company collected more than $100 million from the hidden fees from tenants in California, Colorado, Nevada and Utah, according to the complaint.

All five of the FTC’s commissioners voted in favor of the suit.

“The FTC is suing Greystar for deceptively advertising low monthly rents only to later saddle tenants with hundreds of dollars of hidden junk fees,” FTC Chair Lina Khan said in a statement. “The FTC 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.”

Bloomberg earlier reported the agency was planning a lawsuit.

The lawsuit comes at the end of a Biden administration that has attempted to counter high housing costs in part by cracking down on industry participants that overcharge renters. In his State of the Union address last year, President Joe Biden pledged to target apartment owners who fix prices on rents.

Greystar has been targeted in that effort as well. The Justice Department recently added Greystar and several other large property companies to an ongoing lawsuit alleging widespread collusion between landlords that use software made by RealPage Inc.

And last year the FTC formed a Renters Working Group to examine anticompetitive business conduct by landlords. In September the agency settled with Invitation Homes Inc., with the single-family rental company paying a $48 million fine for alleged junk fees and other deceptive practices.

(Updates with Greystar comment in fourth paragraph.)

To contact the reporters on this story:
Leah Nylen in Washington at lnylen2@bloomberg.net;
Josh Sisco in San Francisco at jsisco6@bloomberg.net;
Patrick Clark in New York at pclark55@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Elizabeth Wasserman, Peter Jeffrey

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