FTC Suit Against Greystar Signals Continued Crackdown on “Junk Fees”

On January 16, 2025, the Federal Trade Commission (“FTC”) and the State of Colorado (collectively, “Plaintiffs”) filed a lawsuit against the “largest multi-family rental property manager in the United States,” Greystar Real Estate Partners, LLC (“Greystar”), accusing it of deceiving consumers about apartment rental fees. Plaintiffs allege that Greystar failed to include hidden, mandatory costs in its advertised monthly fees, costing consumers hundreds of millions of dollars since at least 2019. The lawsuit follows the FTC’s announcement in December of a new rule banning similar “junk fees” for live event tickets, hotels, and vacation rentals, demonstrating that the agency and other law enforcers may continue to target the use of so-called junk fees in industries beyond those specifically covered by the rule. 

While Greystar also owns a large portfolio of multifamily properties, the complaint focuses on its role as property manager for more than 800,000 rental units nationwide and its responsibility for advertising such properties. The complaint alleges that “Greystar falsely advertises that prospective tenants can lease a unit at a Greystar [m]anaged [p]roperty for a set monthly ‘rent’ figure,” but fails to inform prospective tenants that they will also be required to pay “a slew of [h]idden [f]ees,” including for things like trash, packages, media/smart homes, utilities, pest control, local ordinances, and various administrative or “community” fees. According to the complaint, tenants are required to pay these fees—which together can increase the cost of a unit by up to hundreds of dollars per month—regardless of whether they choose to use the services, and Greystar receives a percentage of all nonrefundable amounts paid by tenants.  In other words, the government charges, “the more fees Greystar Managed properties charge, the more money Greystar makes as well.” The complaint targets advertisements for Greystar-managed properties on third-party internet listing services, property-specific websites, and Greystar’s own brand website, claiming that Greystar is responsible for providing and monitoring the prices advertised on each of these channels.  

Plaintiffs allege that even after a prospective tenant applies for a Greystar property, they often do not see the entire cost, and that in many instances the prospective tenant only sees the full amount after they have “submitted their applications, paid the required fees and deposits, and finally received a copy of the lease,” in which hidden fees are still “buried inconspicuously in the contract.” According to Plaintiffs, if at this point the prospective tenant attempts to withdraw their application, Greystar will not refund their application and administrative fees and can choose to retain the applicant’s holding deposit as a form of liquidated damages. Plaintiffs allege that Greystar knows or should have known that this practice misleads prospective tenants because it has received numerous complaints regarding its additional fees. The complaint also notes that, while in 2024 after learning of an ongoing investigation, Greystar began identifying the advertised price as a “base” figure, its ads and website still failed to adequately disclose the actual cost to rent a unit or provide a total monthly leasing price. The FTC argues that Greystar’s pricing practices violate Section 5(a) of the FTC Act and the Gramm-Leach-Bliley Act (“GLBA”), and Colorado alleges that they violate the Colorado Consumer Protection Act (“CCPA”). The Plaintiffs seek a permanent injunction from Greystar and Colorado additionally seeks civil penalties of up to $20,000 for each violation of the CCPA. Further, under the GLBA, Greystar could face an enhanced penalty of $1,000,000 if they are shown to have violated the statute “while violating another law of the United States, or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period.” 15 U.S.C. § 6823 (b).

In a press release, Greystar stated that the lawsuit “targets a longstanding industrywide practice of advertising base rent to potential residents,” and is “based on gross misrepresentations of the facts and fundamentally flawed legal theories.” Greystar criticized the FTC for failing to provide regulatory guidance regarding fee disclosures to the multifamily industry, instead choosing to sue Greystar “in the waning days of the administration.” 

The lawsuit comes on the heels of increased regulatory scrutiny of so-called “junk fees.” On October 11, 2023, the FTC announced a proposed rule to prohibit junk fees across the economy, estimating that “these fees and costs can cost consumers tens of billions of dollars per year in unexpected costs.” The “Junk Fees Rule” was finalized on December 17, 2024, but was significantly narrowed to only cover hotels, vacation rentals, and live ticket events. Despite this narrower scope, the lawsuit against Greystar signals that businesses in other industries could be targeted with enforcement actions if they fail to disclose the total cost of goods or services in advertised prices.

While former FTC Chair Lina Khan stepped down as chair this week and has been replaced by incoming Chair Andrew Ferguson, scrutiny of so-called “junk fees” is unlikely to end with the change in administration. Republican FTC Commissioner Melissa Holyoak voted in favor of the Junk Fees Rule, while Ferguson dissented but only on procedural grounds. Under the Congressional Review Act, President Trump could repeal the rule with a simple majority vote in both houses of Congress. But many observers believe the fact that Ferguson did not object to the merits of the rule signals that it is likely to survive. Moreover, the Commission voted 5-0 in favor of the Greystar lawsuit, confirming that a crackdown on junk fees has bipartisan support. And the fact that Colorado joined the suit illustrates that State Attorneys General could bring similar enforcement actions.  

Multifamily property owners and managers, as well as businesses in other industries targeted by the FTC’s 2023 proposed rule, should take stock of their practices regarding advertised pricing and any potential hidden fees to mitigate risk of a similar enforcement action. Simple labels, such as “base price,” may not suffice in the eyes’ of enforcers, if the total cost is not readily identifiable by costumers. Goodwin’s Antitrust & Competition and Consumer Protection teams can help clients navigate the FTC’s new rule and an ever-changing enforcement landscape. Please contact a member of our team with any questions.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.