The Federal Trade Commission announced Tuesday that Dallas-based Invitation Homes has agreed to pay a proposed $48 million settlement after the company was accused of “unlawful actions against customers.”
Invitation Homes, the largest landlord of single-family homes in the county, was accused of deceiving tenants about lease costs, charging undisclosed junk fees, failing to inspect homes before new residents moved in, and improperly withholding security deposits.
The Federal Trade Commission said Invitation Homes must clearly disclose its leasing prices, establish policies for properly refunding security deposits and prevent other unlawful behavior. The proposed settlement came after the FTC filed a 52-page complaint against Invitation Homes in the U.S. District Court for the Northern District of Georgia on Tuesday morning.
“Invitation Homes, the nation’s largest single-family home landlord, preyed on renters through a variety of unfair and deceptive practices, including charging people hidden fees and improperly withholding security deposits, misleading people about eviction policies during the pandemic, and even pursuing eviction proceedings after people had already moved out,” said FTC Chairwoman Lina M. Khan. “No American should have to pay more for rent or be kicked out of their home because of the illegal tactics of corporate landlords. The FTC will continue to use all of its tools to protect renters from unlawful business practices.”
The agreement must be approved by a federal judge before it can take effect. In a statement, Invitation Homes said the settlement “contains no admission of wrongdoing.”
“Today's settlement ends the FTC's three-year investigation and puts the matter behind the company, which will move forward as always with its continued efforts to better serve its customers and enhance its practices,” the company said.
The complaint filed by the FTC alleges that Invitation Homes advertised monthly rental rates that did not include “mandatory junk fees” that could exceed $1,700 annually. Customers paid non-refundable fees based on the advertised rate and only learned the price would be higher after they received a copy of the lease. The fees ranged from “smart home technology” and “utility management” to air filter delivery and internet packages.
Renters could not opt out of the fees. Since 2019, Invitation Homes collected more than $18 million in application fees alone. The FTC alleges that the firm also collected “tens of millions of dollars” in junk fees from customers as part of their monthly rental payments between 2021 and June 2023.
The FTC also alleges that Invitation Homes did not perform inspections before tenants moved in and did not provide 24/7 emergency maintenance as promised.
Between 2018 and 2023, residents in 33,328 properties submitted at least one work order within the first week after moving there.
Some were issued for plumbing and electrical as well as heating and air conditioning services. In some cases, residents complained of mold, broken appliances, rodent feces and exposed wiring. According to the complaint, Invitation Homes was aware of some of these issues.
Other tenants had to spend days or weeks dealing with “dangerous” conditions, including no heat in the winter, no air in the summer or sewage backing up in their homes.
Invitation Homes also improperly withheld security deposits, according to the FTC's complaint.
Tenants were charged “deceptively and unfairly” 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 reviewed the charges only if a resident disputed them. However, tenants were often unable to contact anyone to review their dispute.
According to the complaint, Invitation Homes returned only 39.2% of the total security deposits customers collected between 2020 and 2022. The national average was 63.9%.
The Dallas-based business is accused of using unfair eviction practices even during the COVID-19 pandemic. The FTC alleges that Invitation Homes “shielded” tenants from filing the Centers for Disease Control and Prevention’s eviction protection declaration.
Instead, Invasion Homes asked tenants to fill out its own “hardship affidavit.” The company's form did not protect tenants from eviction. The firm also took steps to prevent tenants from learning about the CDC announcement. The complaint alleges that call center employees routinely failed to inform customers who called about the CDC form.
Invitation Homes also initiated eviction proceedings against tenants who the firm knew had already moved out of their homes. The proceedings resulted in some eviction filings appearing on tenant screening reports, making it even more difficult for them to rent a home in the future, the complaint alleges.
The FTC said Tuesday that the proposed $48 million settlement would be used to return money to customers harmed by the company's alleged actions.
Invitation Homes must list all monthly fees in the home's advertised rental price. The listing must also include whether the fees are mandatory or not.
The firm can no longer withhold security deposits for normal wear and tear or damage or for problems that existed before a tenant moved in. Under the proposed agreement, Invitation Homes is required to inform consumers about programs to help people facing eviction. The Dallas-based firm is also prohibited from filing eviction cases against residents who have moved out of the home and given notice of their departure.
Invitation Homes is headquartered in Dallas and has about 3,000 homes in the area, according to the firm's 2023 annual report.
Sharon Cornelison, housing director for the advocacy group Consumer Federation of America, said she hopes the settlement sets an important precedent for better regulating institutional landlords.
“There is no place for junk fees in our housing market,” he said in an email. “Eliminating junk fees from housing is especially important because millions of renters can barely afford their rent, which has risen sharply since the pandemic.”