Private Equity Landlord Settles With FTC for Charging Junk ‘Smart Home’ Fees, Other Deceptive Practices

Progress Residential, the largest property manager of single-family rental homes in the U.S., will pay $49.75 million to settle charges brought by the Federal Trade Commission and four states that it engaged in deceptive practices, according to a press release from the federal agency. Progress Residential is owned by private equity firm Pretium Partners and was accused by the FTC of several different types of deceptive practices since 2021, including charging hidden fees, billing errors, and a failure to properly clean homes before renters moved in. According to the FTC’s complaint, Progress even had a policy of using Photoshop to make rental properties appear ready for occupancy. Internal company guidelines instructed employees and vendors to digitally remove dirt and other defects from listing photos and even insert appliances that were missing from properties. The company also allegedly deducted various amounts from security deposits over basic wear and tear, prohibited negative reviews, and didn’t provide “adequate customer service,” according to the FTC. Some of the junk fees included “smart home” and “utility management” fees that were later tacked on after not being disclosed in the advertised price for a rental. The company “unfairly charged a myriad of one-time and situational fees,” according to the FTC, including a “renter’s insurance exemption fee” for not providing proof of renters’ insurance. The FTC said this fee was often only discovered after a tenant received their first monthly bill. The company also claimed that it would only deduct money from renters’ security deposits for damage beyond normal wear and tear. But the FTC alleges that Progress routinely violated that promise. According to the FTC: “Progress routinely withheld some or all of consumers’ security deposits for normal wear and tear, for preexisting conditions and for renovations and repairs that were the companies’ responsibility. Progress also promised to send consumers itemized statements of their security deposit charges within 30 days of move-out, but many consumers never received such a statement.” Contracts also contained nondisparagement provisions that purported to prohibit renters from leaving negative reviews. Under the proposed settlement, Progress Residential will be required to prominently advertise rental prices that include all mandatory recurring fees, rather than surprising renters with additional monthly charges. Progress Residential will also be required to standardize its security deposit process, provide itemized explanations of deductions, and stop misrepresenting whether rental homes have been inspected before tenants move in. Progress Residential, headquartered in Scottsdale, Arizona, manages over 90,000 rental homes across 17 states. The properties are owned primarily by its parent company, Pretium Partners, through various investment funds. Reached for comment over email a spokesperson for the company said that the agreement with the FTC contains no admission of wrongdoing and that they believe Progress Residential’s practices “have been transparent, fair, and consistent with industry practice.” “Although we disagree with the FTC’s claims, this resolution allows us to move forward with our mission of expanding access to quality, affordable rental housing in neighborhoods of opportunity,” the spokesperson said.