(CN) — The state of Colorado joined the Federal Trade Commission Thursday to sue Greystar, one of the largest rental property management companies in the nation, saying it deceives customers via hidden fees added on top of advertised rent prices.
“The FTC is suing Greystar for deceptively advertising low monthly rents only to later saddle tenants with hundreds of dollars of hidden junk fees,” FTC Chair Lina M. Khan said in a press release. “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.”
In their complaint, Colorado and the FTC say hidden fees on rental properties have cost tenants living in Greystar properties upwards of hundreds of millions of dollars since at least 2019. Tenants most often don’t see the fees until they’ve signed a lease, the plaintiffs say.
Greystar denied the accusations in a press release of its own.
“The FTC’s complaint targets a longstanding industry-wide practice of advertising base rent to potential residents,” the property management giant said. “The idea that this is done with the goal of hiding fees from consumers is patently false. No resident at a Greystar-managed community pays a fee they have not seen and agreed to in their lease.”
Greystar said the company advertises base rent without added fees to standardize rent comparison.
“The complaint is based on gross misrepresentations of the facts and fundamentally flawed legal theories,” Greystar said. “We will vigorously defend ourselves against this lawsuit.
The property management firm, which calls itself the “largest operator of apartments in the United States,” manages more than 800,000 rental units and holds ownership interest in at least 100,000 other residential properties through its many subsidiaries. Its more than $32 billion portfolio includes apartment buildings and complexes, senior housing and student housing.
The company advertises rental properties in a number of venues, including third-party sites like Zillow, on its own website and on sites for individual buildings and complexes. Consumers, though, don’t rent a Greystar unit for the advertised price, but instead pay a higher price inflated by hidden fees, the plaintiffs say in the complaint.
The state and the FTC accuse Greystar of violating the federal FTC and the Colorado Consumer Protections Act, both of which prohibit unfair or deceptive trade practices.
They also say Greystar violated the federal Gramm-Leach-Bliley Act of 1999, which prohibits the use of false or fraudulent statements to collect customers’ financial information.
The plaintiffs claim the companies’ practices violate the statute by enticing people to share bank account and credit card information when they pay application and holding fees based on deceptive price advertising.
The plaintiffs say Greystar’s hidden fees range from tens to hundreds of dollars a month, which add up substantially over the course of a consumer’s lease. Some hidden fees noted in the complaint are for valet trash, package handling, utility bill distribution, verification fees when consumers use non-Greystar-provided renters’ insurance, and fees for smart home packages.
Whether customers use the service, they cannot opt out of the fees.
Some are revealed only after customers have paid non-refundable application or holding fees, and others only after a lease has been signed, the plaintiffs say.
According to the FTC and Colorado in their complaint, a Greystar customer the plaintiffs surveyed said hidden fees increased their rent from the price advertised by $400 without adding utilities.
“When you need a place to stay you do what you gotta do, right?” he asked.
Another customer warned others not to rent with Greystar. They backed out from signing the lease, but lost $360 in non-refundable deposits and application fees.
“Because of Greystar’s deceptive advertising and hidden fees, tenants are on the hook in their lease for hundreds, if not thousands, of dollars more than they anticipated that their apartment would cost,” Colorado Attorney General Phil Weiser said in a statement. “Greystar is thwarting apartment hunters from comparison shopping and choosing a home that fits within their budget.
Weiser warned other rental management companies that Colorado will come for them next.
“They are on notice,” he said.