This Corporate Landlord Owes Tenants Nearly $50 Million

“We need to juice this hog,” Invitation Homes' CEO said of gouging renters with fees.

by Yaseen al-Sheikh, More Perfect Union

The largest owner of single-family homes in the U.S. has agreed to a landmark $48 million settlement with the Federal Trade Commission, after being accused of using unfair and deceptive practices to siphon millions of dollars from tenants.

Invitation Homes, a Dallas-based corporation that owns more than 80,000 rental homes across the country, allegedly hid junk fees and systematically stole security deposits from tenants after their leases expired by withholding them for dubious reasons, according to an FTC complaint. 

This was company policy at the highest level, Director Sam Levine of the FTC’s Bureau of Consumer Protection told More Perfect Union.

“It was the CEO of Invitation Homes who said, 'we need to ‘juice this hog,’” Levine said, referring to a “smart home” fee. “We need to squeeze renters for all of these fees. This was not a low-level employee. This was a deliberate corporate strategy that started at the top.” 

The case against Invitation Homes marks the first time the FTC has brought a case against a corporate landlord, coming at a moment when the cost of housing is one of the biggest drivers of inflation. Invitation Homes saw record profits during the pandemic, to the tune of nearly $200 million in 2020 and $250 million in 2021.

“We get millions of complaints every year from people reporting all sorts of abuses they're facing in their everyday lives,” Levine said. “And one of the things we've heard in the housing sector is that renters are facing a lot of abuses today.” 

The settlement was approved on September 27th by the Northern District of Georgia’s U.S. District Court, with payments to tenants to be dispersed soon. “No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords.” FTC Chair Lina Khan said. “The FTC will continue to use all our tools to protect renters from unlawful business practices.”

In addition to unfair and deceptive practices, the FTC also found that Invitation Homes has an exceptionally poor track record of fulfilling maintenance obligations. Tenants have complained of cracked ceilings, unresolved water damage, broken appliances, and more. “More than 30,000 renters had complaints about maintenance within one week of moving in,” Levine said. 

Perhaps most dramatically, Invitation Homes also steered tenants away from federal eviction protections during the COVID-19 pandemic. “What Invitation Homes did is create their own separate form called a hardship affidavit…but it didn’t have any effect,” Levine said. “And then [invitation Homes] went on to initiate evictions against many of these folks.” 

At the very same time, Invitation Homes filed more than 3,300 eviction actions against tenants. Many of these tenants had rental assistance applications pending at the time. The company has claimed that only 6 percent of these actions resulted in tenants losing their access to housing, but Invitation Homes’ own data indicates that it was in reality closer to 28 percent.

The settlement agreement includes the $48 million to be refunded to renters, and the company will have to notify their residents of the relevant local, state, and federal assistance programs when they are facing the possibility of eviction. The company will also be required to increase transparency on rental prices and security deposits. Hidden fees put into leases by Invitation Homes, ranging from vaguely defined “utility management” to internet fees, were so comprehensive that, in some of the cases, tenants were paying up to an additional $1,700 more per year than what they had originally expected. From 2021 to this year, Invitation Homes made tens of millions of dollars via these deceptive pricing schemes, according to the complaint.  

And while renters are normally entitled to have their security deposit returned to them as soon their lease ends, Invitation Homes withheld significant amounts of the deposits in order to reach their yearly profit goals. Whereas the national average for how much of a security deposit is withheld sits around 36 percent, Invitation Homes consistently withheld around 60 percent with little to no explanation. 

“They said themselves they knew they were upsetting tenants by withholding so much in security deposits, but they had to hit the numbers investors needed to see,” Levine said.

With corporate landlords buying up more housing units across the country, the need to address rampant abuses becomes more urgent. We looked into Invitation Homes’ practices and the FTC’s settlement because tenants deserve a safe place to live that’s as affordable as advertised — and a government they can depend on to fight on their behalf if the landlord doesn’t hold up their end of the bargain.