The Federal Trade Commission filed a lawsuit in January against Greystar Management Services for hidden property fees. The FTC and the State of Colorado alleged Greystar was using hidden fees when leasing out to tenants, according to the lawsuit.
The plaintiff allegest Greystar hid fees from their tenants, like valet trash fees, package delivery, real estate taxes and pest control.
Greystar, the largest real estate manager in the country, allegedly collected more than $100 million from hidden fees at its properties in California, Colorado, Nevada and Utah, according to the complaint.
Greystar has properties at the University of Minnesota: Hub Minneapolis at 311 Harvard Street SE and The Marshall at 515 14th Ave. SE.
Greystar allegedly drew in renters with low fees on their properties, and hid additional fees until the tenant paid to apply and received the lease application packet.
Greystar denied the claims of hidden fees in a January press release.
“The FTC’s complaint targets a longstanding industrywide practice of advertising base rent to potential residents. The idea that this is done with the goal of hiding fees from consumers is patently false,” Greystar wrote in the press release. “No resident at a Greystar-managed community pays a fee they have not seen and agreed to in their lease.”
Edward Goetz, the Center for Urban and Regional Affairs director at the University, said hidden fees are mandatory fees that landlords impose on tenants without disclosing them.
“They hide them in the sense that they don’t disclose them to the tenants when the tenants are applying for the unit,” Goetz said. “If they’re advertising the unit, they will advertise the rent, but they won’t advertise the actual additional fees that are associated with it.”
Goetz said hidden fees can be especially harmful for students.
“This is a real risk, because if you fall behind on your rent because of these fees, then that can be on your record and hurt your prospects for getting rented in the future,” Goetz said.
This is not the first time Greystar Properties has been sued. Greystar was investigated by the Department of Justice for using property management software RealPage in August, according to the Minnesota Reformer.
The DOJ sued RealPage and five other companies for unlawfully using rent algorithms in January, according to The Minnesota Daily.
Greystar later settled with the DOJ and agreed not to use RealPage algorithms.
Minneapolis became the fourth city to ban the use of rent algorithms in April. The Minneapolis City Council banned the use of AI for fixing rent this year.
Council member Robin Wonsley (Ward 2) said the lawsuit was a step in the right direction.
“I worked with students and renters to ban these algorithms in Minneapolis to protect renters from price gouging,” Wonsley said in a statement. “Minneapolis renters, especially students, are looking to the local government to rein in corporate landlords like Greystar, who jack up rents and fees for their own profit.”
Sen. Amy Klobuchar (D-Minn.) said she was glad the FTC was pursuing the suit. Klobuchar, who chairs the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, requested the DOJ investigate RealPage in 2022.
“I am glad the FTC is holding Greystar — the largest landlord in the country — accountable for using hidden fees to deceive renters about prices,” Klobuchar said in a statement. “Renters deserve to know the full cost of their apartment before signing a lease.”
