FTC cracks down on Invitation Homes after it 'preyed on tenants'

The nation's largest single-family landlord forced to pay $48 million in FTC settlement over hidden fees and deceptive practices
By Meagan Faryna
•
02 October 2024
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Invitation Homes—the nation's largest single-family rental company—will pay $48 million to settle federal allegations of exploiting renters through hidden fees and unfair practices.

Federal regulators say the company misled tenants about true rental costs, charged undisclosed "junk fees," and engaged in deceptive practices during Covid. Invitation Homes manages over 100,000 homes across the United States.

"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, “ said Federal Trade Commission (FTC) Chair Lina M. Khan in a statement.

According to the FTC, tenants of Invitation Homes would stumble upon surprise charges only after signing their leases. These "junk fees" could exceed $1,700 annually.

On paper, the amount covered various services, including "smart home" technology, "utility management," air filter delivery, and mandatory internet packages. In reality, the fees were there to balloon the company's profits to $22 billion.

The FTC claims Invitation Homes also discouraged renters from using CDC eviction protections during the pandemic. Instead, the company allegedly pushed tenants to fill out its own "Hardship Affidavit," which didn't actually protect against eviction.

The $48 million settlement means tenants will finally get the refunds they deserve.

Going forward, Invitation Homes must also clearly show all rental costs, including required fees, in its advertised prices. The company is also barred from keeping security deposits for normal wear and tear or pre-existing damage.

Invitation Homes denies any wrongdoing

The FTC's complaint also includes some eyebrow-raising internal communications. In one instance, Invitation Homes' CEO reportedly told a senior vice president to "juice this hog" by making smart home fees mandatory for renters.

Invitation Homes acknowledged the settlement while denying wrongdoing in their statement, pointing out there will be no civil penalties related to their actions as a company.

"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,” the statement reads.

A "shot across the bow" for corporate landlords

The case marks the FTC's first major enforcement action in the rental housing market since forming a Renters Working Group earlier this year. The group aims to examine unfair, deceptive, and anticompetitive practices affecting renters.

Taylor Shelton, a geographer at Georgia State University who specializes in studying corporate landlords, told an Atlanta newspaper that the FTC’s move puts a target on the backs of institutional investors who have acquired numerous rental properties since the 2008 financial crisis.

"This action against Invitation Homes is a really significant shot across the bow for corporate landlords across the country," he said. "Most of the unfair and deceptive practices the FTC cites are things we know to be not only commonplace across the industry, but actually part of these companies' fundamental business model and standard operating procedures."

The proposed settlement now awaits approval from a federal judge before it can take effect.

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