The FTC is keeping its focus on the rental housing market. Just a week after the FTC and the State of Colorado settled their lawsuit against an institutional apartment operator over fee disclosures, the FTC sent letters to thirteen property management software providers warning them that the agency is scrutinizing potential law violations.

The letters said, “[a]vailable information suggests that property management software providers are limiting the availability of rental property managers and owners to accurately advertise the total monthly rental price, inclusive of all mandatory fees.” The letters warn that this practice may cause consumer harm and harm to competition in the rental housing market. The letters remind the recipients that the FTC has authority under Section 5 of the FTC Act to investigate unfair or deceptive acts and practices in or affecting commerce. The letters also instruct the recipients that the FTC can pursue enforcement actions for violations of the Gramm-Leach-Bliley Act, which has civil penalties of up to $53,088 per violation.

The letters advise the property management software providers to conduct comprehensive reviews of their practices, including website hosting platforms and any software or coding controlling the flow of information from software to internet listing sites to ensure compliance with applicable laws. The FTC urges the companies to make sure they aren’t impeding with the ability of property owners and managers to provide consumers with transparent rental prices.

Rental housing providers have expressed concerns over the hurdles they encounter aggregating pricing components and presenting transactional, all-in pricing in new ways, using a wide range of accounting, marketing, and leasing solutions that communicate fee information in proprietary formats. Legacy APIs can lack the level of detail that the FTC is expecting in fee-related descriptions. The FTC has made it clear that, under Section 5, it expects the total monthly leasing price in all marketing pricing, and clear descriptions of the amount, purpose, and optionality of component fees in the marketing phase. Layering on Section 5 standards atop state landlord-tenant and consumer protection laws creates real, new challenges for landlords to provide the total monthly leasing price with fee-related details for all lease-related mandatory fees to the consumer prior to completing an application.

The multifamily rental industry has been hard at work building model fee definitions and technical tools to improve transparency around rental fees. The Real Estate Technology & Transformation Center has updated and promoted the Multifamily Information Transaction Standards 5.0 (“MITS 5.0”) data model. The update represents a collaborative effort in the industry to improve property management efficiency and focus on fee transparency. Data standards like MITS 5.0 enable accurate data sharing and reporting, which is essential for consistency and clarity in the multifamily rental industry, to promote a connected, informed ecosystem that arms renters with clear and accessible information to make informed housing choices. As the FTC and other regulators keep their focus on fee transparency in the rental housing market, property management companies and software vendors will need to continue to collaborate to ensure interoperability among various software solutions necessary to communicate total monthly leasing price and mandatory fee descriptions to rental applicants.

RESOURCES:

You can review all of the relevant administrative filings and press releases at the FTC’s Enforcement Page.

• Press Release
• Letter Template