Greystar is set to face a federal lawsuit as soon as this week over allegations the nationwide developer and manager of apartment buildings stuck renters with millions of dollars in hidden fees, according to people familiar with the probe.
The US Federal Trade Commission has prepared a suit accusing the company — the largest third-party apartment manager in the US — of falsely advertising rental prices by failing to inform potential renters of numerous mandatory fees, according to the people, who spoke anonymously to discuss a confidential investigation.
The fees, which range from tens to hundreds of dollars a month, aren’t disclosed to potential renters until after they fill out an inquiry form, or in some cases after they have paid an application fee or holding deposit, according to the people.
The lawsuit is expected to allege that Greystar violated US consumer protection laws that bar misleading advertising as well as the Gramm-Leach-Bliley Act, which safeguards consumer financial information, the people said.
“Greystar has worked hard to lead the industry toward improved fee disclosures and has taken proactive steps over the last several years to promote greater fee transparency,” the company said in a statement. “The most effective path to achieving uniform and consistent fee disclosures across the industry is through clear regulatory guidelines which do not yet exist in the rental space.”
The FTC didn’t immediately respond to a request for comment.
Greystar manages nearly 800,000 apartments, making it by far the largest third-party property manager in the US, according to the National Multifamily Housing Council, a trade group. It also owns a substantial apartment portfolio.
Last year, the FTC formed a Renters Working Group to examine unfair and anticompetitive business conduct by landlords. In September, the agency settled with Invitation Homes Inc., and the single-family rental company agreed to pay a $48 million fine for alleged junk fees and other deceptive promises.
The Biden Administration has attempted to counter housing costs and supply as a key part of its economic policy. In his State of Union Address last year, President Joe Biden pledged to target landlords who fix prices on rents. Greystar has been targeted in that effort as well. Just last week, the Justice Department added it and several other large property companies to an ongoing lawsuit alleging widespread collusion between landlords who use software made by RealPage Inc.
Source: bloomberg.com
