The Federal Trade Commission and the state of Colorado announced Thursday that they are suing Greystar for allegedly deceiving consumers about monthly rent costs by adding mandatory fees on top of advertised prices.
According to the civil lawsuit, hidden fees have cost consumers living in Greystar properties hundreds of millions of dollars since at least 2019, and consumers often have not discovered the fees until after they have signed a lease or moved in.
“The FTC is suing Greystar for deceptively advertising low monthly rents only to later saddle tenants with hundreds of dollars of hidden junk fees,” said FTC Chair Lina Khan in the Jan. 16 release.
The complaint, filed in the U.S. District Court for the District of Colorado, charges that Greystar and a number of its subsidiaries violated the FTC Act, the Gramm-Leach-Bliley Act and the Colorado Consumer Protection Act. The vote authorizing the complaint was 5-0, with both Republican commissioners — including Andrew Ferguson, President-elect Donald Trump’s choice for new FTC Chair — approving the lawsuit.
Charleston, South Carolina-based Greystar, the country’s No. 1 apartment owner, developer and manager, according to the National Multifamily Housing Council’s most recent Top 50 lists, called the lawsuit “headline-grabbing litigation” and noted it was filed in the waning days of the Biden administration.
“The complaint is based on gross misrepresentations of the facts and fundamentally flawed legal theories. We will vigorously defend ourselves against this lawsuit,” the company’s statement said.
Greystar said that the suit targets what it called a longstanding industrywide practice of advertising base rent to potential residents.
“The idea that this is done with the goal of hiding fees from consumers is patently false,” the company said. “No resident at a Greystar-managed community pays a fee they have not seen and agreed to in their lease.”
Greystar, the rest of the industry and consumers all focus on base rent because it has been the standard unit of comparison used for decades to evaluate and compare apartments, Greystar’s statement said.
Types of alleged fees
Greystar’s hidden fees allegedly range from tens to hundreds of dollars a month, which add up substantially over the course of a consumer’s lease, the complaint said. Among the fees noted are:
- “Valet trash” fees.
- Package handling fees.
- Utility fees.
- Fees to distribute utility bills.
- “Verification fees” when consumers use non-Greystar-provided renters’ insurance and media/smart home packages.
The FTC and Colorado alleged that consumers cannot opt out of these fees even if they do not want or use the related services.
In many instances, renters who saw an advertisement for a Greystar apartment had no way to learn about these hidden fees until after they filled out inquiry forms with their personal information or clicked through small-print hyperlinks, according to the complaint. It also said that Greystar, in some cases, waited to reveal fees until after customers had paid a substantial application fee or holding deposit, and then only in the fine print of a 40- to 60-page lease agreement.
The complaint further charges that if would-be renters discover the existence of the fees after their application is approved and choose not to sign the lease, Greystar does not refund the application fees or holding deposits they paid, which can be hundreds of dollars.
The complaint cites multiple examples of Greystar-managed properties where its advertisements on third-party real estate listing sites, like Zillow, failed to list the company’s mandatory fees, despite those sites having a specific “fees” section where the company does list optional fees like those for parking or pets. According to the complaint, even on websites Greystar operated, apartment listings did not include information about mandatory fees, even where optional fees were listed.
Even after moving into Greystar-managed apartments, renters complained that they were still surprised by mandatory fees for services they either didn’t ask for or didn’t use, according to the suit.
Expanded focus
The lawsuit is a continuation of the Biden administration’s focus on the rising costs of housing in the country. The Department of Justice last week added six of the country’s top landlords, including Greystar, to its lawsuit against data and software firm RealPage.
In a statement posted on its website last week, Greystar said it was disappointed that the DOJ added the company and other operators to its lawsuit against RealPage.
“Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices,” the firm said in the statement. “We will vigorously defend ourselves in this lawsuit.”
Last month, the FTC issued a final rule against hidden fees, which requires the live-event ticketing and short-term lodging industries to include all mandatory fees in their advertised pricing. The multifamily industry was not included in the rule.
Khan noted in the Thursday statement that she hopes the commission continues its focus on investigating practices that could contribute to a lack of housing affordability.
“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,” she said.
