Progress Residential and Pretium agree to pay $49.75 million to settle FTC and state charges over rental fees

Progress Residential, which manages more than 90,000 single-family rental homes in 17 states, and Pretium Partners, the private equity firm that owns it, have agreed to pay $49.75 million to settle charges that they misled renters about the true cost of their homes. The Federal Trade Commission and the states of Arizona, Colorado, Indiana and Utah announced the case on November 6, filing a complaint and a proposed stipulated order together in federal court in Atlanta.

The FTC called it "the largest enforcement matter taken against a landlord in the Commission's history." The settlement is a proposed order that gains the force of law only when a judge of the U.S. District Court for the Northern District of Georgia approves and signs it. The FTC's case page still listed the case as pending on November 10. The allegations have not been proven in court.

What the complaint alleges

The central claim is about the advertised rent. According to the complaint, the monthly price Progress showed on its own listings and on rental sites such as Zillow and Trulia left out fees that tenants had to pay anyway. As a result, it says, renters typically paid between $30 and $330 or more a month above the advertised figure. The FTC says many tenants first saw one charge, a fee for not providing proof of renters' insurance, on their first monthly bill.

The complaint quotes the company's own figures. An internal report from late 2021 found that recurring fees raised residents' average monthly charges by $70, and one-time and situational fees by another $73, for an average of $1,716 over a one-year lease. A 2023 report shared with executives of both companies put 2022 income from fees and what Progress calls penalties at $68.8 million, plus $6.9 million from smart home fees, the complaint says.

The regulators also allege that numerous tenants found homes billed as inspected and "move-in ready" in need of serious repairs or cleaning. Deposits, they say, were routinely docked for ordinary wear, for damage already there when the tenant arrived, and for renovation work the landlord should have paid for. Many renters never received the itemized deposit statement promised within 30 days of moving out, the FTC says. The complaint also cites unanswered service requests and lease clauses barring negative comments.

What the order would require

• A "Total Monthly Rental Price", covering rent and every recurring mandatory fee but not variable utility costs or optional fees, shown more prominently than any other price.
• No claims that a home was inspected, or passed an inspection, before move-in unless that is true.
• Uniform standards and records for deposit deductions, and an itemized statement within 30 days of move-out or the deadline set by state law.
• No deductions for normal wear and tear, for conditions that existed before the tenant moved in, or for certain renovation costs.
• No standardized clauses that stop residents from posting negative reviews.

Under the order, the money comes in installments: $4.5 million, already held in escrow by the companies' lawyers, within 10 days of the order's entry, then $4 million every 30 days, the last due 330 days after the first. The FTC says its $48.5 million will fund redress for renters. The order leaves that process to the FTC or its designee and lets the agency put the money to related relief, or send it to the U.S. Treasury, if direct payments prove impracticable. Arizona's $1.25 million covers its attorneys' fees and costs.

The companies' position

In the order, Progress and Pretium "neither admit nor deny any of the allegations in the Complaint," with exceptions the order spells out, and admit only the facts needed to establish the court's jurisdiction. Those exceptions include an agreement that the facts alleged in the complaint will be taken as true in any later civil case brought by or for the plaintiffs, including one to collect the money or a bankruptcy case. According to the FTC, the complaint says most of the conduct happened before the current managers took charge, and that they have taken steps to fix the problems. The commission voted 2-0 to file the case.

Advice for renters

In a consumer alert on the case, the FTC says renters have reported fees "buried in footnotes, hyperlinks, or fine print." It advises getting the monthly rent, mandatory fees included, confirmed in writing before paying any application or holding fee. It also suggests photographing a home at move-in and move-out, sending the move-in photos to the landlord right away, and asking for a pre-move-out inspection and an itemized list of deposit deductions.

Deposit rules and deadlines also depend on state law, which the order defers to. The FTC takes reports of hidden fees and other deceptive rental practices at ReportFraud.ftc.gov.