FTC sues Greystar with lawsuit over ‘misleading advertising’
President Joe Biden is just days away from taking office, but his administration is taking another stab at the real estate sector.
The Federal Trade Commission (FTC) announced Thursday that it is suing the multifamily manager Graystar for allegedly misleading renters by adding mandatory fees that caused prices to rise above the advertised amount.
The complaint was filed in the United States District Court for the District of Coloradoand the State of Colorado is also a plaintiff in the case. According to the FTC, this alleged practice violates the Federal Trade Commission Act, the Gramm-Leach-Bliley Act, and the Colorado Consumer Protection Act.
“Because of Greystar’s misleading advertising and hidden fees, tenants are stuck with their lease for hundreds, if not thousands, of dollars more than they expected their apartment to cost,” Colorado Attorney General Phil Weiser said in a statement. “Greystar’s actions prevent apartment hunters from making comparisons and choosing a home that fits their budget.”
The complaint lists a number of fees that Greystar charges that it calls “hidden,” and the FTC alleges that Greystar does not provide information about these fees to apartment hunters. These include costs related to utilities and for the use of renters insurance not offered by Greystar. Consumers will reportedly not be given the opportunity to opt out of these fees.
In a statement, Greystar denounced the FTC’s approach of producing “headline news” lawsuits instead of working with the company to “achieve meaningful improvements for consumers in the rental housing industry.”
“The FTC’s complaint targets a long-standing industry-wide practice of advertising base rents to potential residents,” the statement reads. “The idea that this is being done for the purpose of hiding costs from consumers is patently false. No resident of a Greystar managed community will pay a fee that they did not see and agree to in their lease.”
The Biden administration has been aggressive in cracking down on what it sees as antitrust and consumer protection violations, and the real estate industry has been in the crosshairs several times. Although it did not play a direct role in the National Association of Real Estate Agents‘ (NAR) $418 million settlement of class-action antitrust lawsuits, it hovered around the related cases and indicated it would intervene if deemed necessary.
Plaintiffs in the related cases accused NAR-affiliated multiple listing services of conspiring to artificially inflate broker commissions through the sharing of private information.
In August the Ministry of Justice (DOJ) affected RealPage with an antitrust lawsuit alleging that the company’s YieldStar and AI revenue management (AIRM) software helped multifamily landlords artificially inflate rents through the sharing of private information, claims that echo those in the NAR business.
President-elect Donald Trump has not made any comments on these efforts, so it is an open question whether his administration will continue to pursue these cases or, more broadly, the issues of antitrust and consumer protection.
