Homes Invited to Settle FTC Unfair Rental Practices Claims for $48 Million
Invitation Housesthe largest owner of U.S. single-family homes, has agreed to pay $48 million to consumers and change some of its practices, according to a proposed settlement with the U.S. government. Federal Trade Commission (FTC) that was announced on Tuesday.
According to the FTC, Invitation Homes advertised monthly rental rates with no mandatory “junk fees.” It also allowed tenants to move into homes that were “in significant disrepair,” “systematically withheld renters’ security deposits” when they moved, and used unfair eviction practices.
The action against Invitation Homes is the first to result from an FTC action launched earlier this year. The group was tasked with investigating unfair, deceptive and anti-competitive practices in the rental housing sector.
“No American should have to pay more rent or be evicted because of illegal tactics by business owners. The FTC will continue to use all of our tools to protect tenants from unlawful business practices,” FTCC President Lina M. Khan said in a statement.
In a statement, Invitation Homes said it will pay monetary relief but no civil penalties, and that the agreement contains no admission of wrongdoing.
“Invitation Homes believes its disclosures and practices are industry leaders, both among professional peers and among the millions of smaller owners of single-family homes for rent,” the company said. “Today’s agreement ends the FTC’s three-year investigation and puts this case behind the company, which as always will continue its ongoing efforts to better serve its customers and improve its practices.”
The FTC alleges that the company hid certain costs — such as those for smart-home technology, air filters and internet packages — that potentially added more than $1,700 per year to rental costs. Renters only learned about the fees after receiving or signing their lease, and after paying application fees of up to $55 and reservation fees of up to $500.
Invitation Homes also promised a “quality assurance inspection” and “24/7 emergency maintenance.” But residents of more than 33,000 homes submitted at least one work order, including plumbing and electrical problems, within the first week of moving in, according to the FTC complaint. Invitation owns or manages more than 100,000 homes.
The agency also alleges that the company has systematically withheld renters’ security deposits for normal wear and tear damage. According to the FTC, in some regions of the country the company charged tenants for all repairs needed for a unit and only revised the charges if residents disputed them. This resulted in the return of only 39.2% of total consumer deposits collected between 2020 and 2022, compared to the national average of 63.9%.
The FTC also alleges that Invitation Homes prevented its tenants from filing a government-required declaration during the COVID-19 pandemic. Centers for Disease Control and Prevention (CDC) to prevent them from being deported during a national moratorium.
As part of the proposed settlement, the company is required to disclose lease reimbursements and handle deposit refunds fairly. The settlement must be approved by a federal judge before it takes effect.
Editor’s note: This story has been updated with a statement from Invitation Homes.
