The Federal Trade Commission announced Tuesday that Dallas-based Invitation Homes Inc. has agreed to pay a proposed $48 million settlement after being accused of “misconduct against customers.”
Invitation Homes, the county’s largest single-family landlord, was accused of cheating tenants out of rent, charging undisclosed junk fees, failing to inspect homes before new tenants moved in and wrongfully withholding security deposits.
The FTC said it will require Invitation Homes to clearly disclose rental rates, establish a policy for fair return of security deposits, and end other illegal practices. The proposed settlement comes after the FTC filed a 52-page complaint against Invitation Homes on Tuesday morning in the U.S. District Court for the Northern District of Georgia.
“Invitation Homes, the nation’s largest single-family landlord, preyed on tenants with a variety of unfair and deceptive tactics, including charging hidden fees, improperly withholding security deposits, misleading people about its eviction policies during the pandemic, and pursuing eviction proceedings after people had moved out,” said FTC Chairman Lina M. Khan. “No American should have to pay more for rent or be evicted from their homes because of a corporate landlord’s unlawful tactics, and the FTC will continue to do everything in its power to protect tenants from unlawful business practices.”
The settlement must be approved by a federal judge before it can take effect. Invitation Homes said in a statement that the agreement “does not contain any admission of wrongdoing.”
“Today’s agreement brings to an end the FTC’s three-year investigation and puts this matter behind us. As always, we remain committed to our ongoing efforts to better serve our customers and improve our operations,” the company said.
According to a complaint filed by the FTC, Invitation Homes advertised monthly rental rates that did not include “mandatory junk fees” that could amount to more than $1,700 per year. Customers paid nonrefundable fees based on the advertised rate and only learned the fees were higher after receiving a copy of their rental agreement. The fees ranged from “smart home technology” and “utility management” to air purifier delivery and internet packages.
Renters cannot waive the fees. Since 2019, Invitation Homes has collected more than $18 million in application fees alone. The FTC alleges that the company collected “tens of millions of dollars” in junk fees from customers as part of their monthly rent between 2021 and June 2023.
The FTC also alleges that Invitation Homes failed to conduct inspections before tenants moved in and failed to provide 24/7 emergency maintenance as it promised.
Between 2018 and 2023, residents of 33,328 properties submitted at least one work order within one week of moving in.
There were also several complaints about plumbing, electrical and heating and air conditioning. In some cases, residents reported mold, broken appliances, rodent droppings and exposed wiring — some of the problems Invitation Homes knew about, according to the complaints.
Other tenants have had to deal with “dangerous” conditions for days or weeks, including no heating in the winter, no air conditioning in the summer and sewage backing up into their homes.
According to the FTC complaint, Invitation Homes also improperly withheld security deposits.
Renters were “deceptively and unfairly” charged for normal wear and tear that was present before they moved in. The FTC also alleges that Invitation Homes eliminated pre-move-out inspections and instead charged residents for all repairs. The company only revised charges if residents disputed them, but renters often had no way to contact them to dispute them.
Invitation Homes returned only 39.2% of the total deposits it collected from customers between 2020 and 2022. The national average was 63.9%, according to the lawsuit.
The Dallas-based company also allegedly engaged in unfair eviction practices, including during the COVID-19 pandemic, with the FTC alleging that Invitation Homes “induced” renters not to file Centers for Disease Control and Prevention eviction protection declarations.
Instead, Inviation Homes required its tenants to fill out “affidavits of hardship.” The company’s forms did not offer tenants any eviction protections. The company also took steps to prevent tenants from learning about the CDC declaration. Call center employees failed to regularly inform callers about the CDC forms, the lawsuit alleges.
Invitation Homes also initiated eviction proceedings against tenants it knew had already moved out, which resulted in some eviction applications appearing on occupancy reports, making it more difficult for future tenants to rent homes, the lawsuit alleges.
The FTC announced Tuesday that the proposed $48 million settlement will be used to refund customers harmed by the company’s conduct.
Invitation Homes must list all monthly fees in the advertised rental price of the home, and must also state whether the fees are mandatory.
The company can no longer garnish security deposits for normal wear and tear or for problems that existed before occupancy. Under the proposed agreement, Invitation Homes would be required to inform consumers about programs that help people facing eviction. The Dallas-based company would also be barred from filing eviction lawsuits against residents who filed notices to quit and left their homes.
Invitation Homes is headquartered in Dallas and owns about 3,000 homes in the area, according to the company’s fiscal year 2023 annual report.
Sharon Corneliussen, housing director for the Consumer Federation of America, a consumer advocacy group, said she hopes the settlement sets an important precedent to better regulate institutional renters.
“Junk fees have no place in our nation’s housing market,” she said in an email. “Purging junk fees from housing is especially important as rents have skyrocketed since the pandemic and millions of renters are struggling to make their rent payments.”
