PESP Calls on the FTC to Eliminate Junk Fees for Tenants

On October 20, 2022 the Federal Trade Commission (FTC) announced that it was exploring a rule to crack down on junk fees proliferating throughout the economy. The FTC described “junk fees” as “unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value.”[1]

Consumers can get hit with junk fees at any stage of the purchase or payment process. Companies often harvest junk fees by imposing them on captive consumers (such as tenants) or by deploying digital dark patterns and other tricks to hide or mask them. Therefore, the FTC sought public comment on the harms caused by junk fees and the unfair or deceptive tactics companies use to impose them.[2]

On February 8, PESP submitted comment to the FTC detailing the effects of extractive junk fees on tenants. Private equity and REIT-owned real estate companies are notorious for imposing junk fees on tenants. For example, one lease from Progress Residential (owned by PE firm Pretium Partners), the largest single family rental company in the United States, with over 90,000 homes, includes:^[3]

• A $125 late fee if rent is paid after the third of the month. If a resident pays late two or more times, Progress has the right to increase the amount of the late fee;
• A $40 late fee if Progress posts a notice to pay rent;
• A nonrefundable fee of $125 for lease administration;
• An eviction administration fee of $200 for preparation of documents for an eviction proceeding;
• A $75 trip fee to have Progress send a maintenance person to the home to make repairs;
• A $25 account set-up fee, and a $9.99 monthly service fee, for the mandatory use of the Conservice utility billing program; and
• An initial nonrefundable pet fee of $300 (per pet), plus $35 monthly per pet.

Thus, PESP called on the FTC to promulgate a specific list of junk fees that are concerned unfair and/or deceptive to provide tenants and other consumers with explicit protections.

Please find PESP’s comment letter here. If you have any questions about the FTC’s request for comment, or PESP’s comment letter, please contact PESP’s Senior Policy Coordinator, Chris Noble, at chris.noble@pestakeholder.org.

[1]https://www.ftc.gov/news-events/news/press-releases/2022/10/federal-trade-commission-explores-rule-cracking-down-junk-fees

[2]Id.

[3] Progress Residential eviction filing, case # 2020-022982-CC-26, filed 12/4/20 in Miami Dade County, FL.