Property management company Invitation Homes, headquartered in Dallas, agreed to pay $48 million in settlement money for deceiving renters and using unfair eviction practices, the Federal Trade Commission announced Tuesday.
The settlement money will go to renters targeted in the company's "unlawful behavior," the FTC said. It's the first enforcement action by the agency-wide Renter's Working Group since it was formed earlier this year, which was created to examine unfair and deceptive practices toward renters.
The settlement must still be approved by a federal judge.
In a statement, Invitation Homes said the settlement ends a three-year investigation into the company.
"Invitation Homes believes that its disclosures and practices are industry leading, both among its professional peers as well as the millions of smaller owners of single-family homes for lease," the company said.
Invitation Homes is the largest single-family landlord in the country, with more than 80,000 homes across the country. Nearly 3,000 of its rental properties are in North Texas.
Farrar said Invitation Homes used junk fees to "jack up" the rent, including nonrefundable application fees, "utility management" fees or "smart home" fees that could add up over the course of a year.
"That is an illegal business practice by not disclosing those up front," he said.
Farrar added that Invitation Homes had "shoddy" inspection and maintenance practices.
"Invitation Homes essentially promised renters that when they arrived at the home, the home would be ready to be lived in," he said. "But instead, residents routinely found units in serious disrepair, including exposed wire, mold and broken appliances."
The company also promised 24-hour, seven-day-a-week service. However, some services would be cut off and unable to be restored for days.
Invitation Homes also withheld security deposits and evicted residents after steering them from eviction protections, according to the agency.
Along with the $48 million settlement, Invitation Homes is prohibited from deceiving customers and withholding certain security deposits. The company also must inform customers about programs for people facing eviction.
The FTC can continue investigating Invitation Homes to ensure compliance. However, customers will help protect and enforce the FTC's agreement as well, Farrar said.
"If we hear from consumers that these practices are ongoing, that would be a violation of our agreement and could trigger additional penalties," he said.
The FTC's action against Invitation Homes is one the agency hopes will send a signal to the market —especially rental homes owned by corporate landlords — that illegal practices have serious penalties, Farrar added.
"And we know, as the nearly 110-year-old consumer protection watchdog agency for this country, that the market takes these signals seriously," he said.
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