Squeezing Money out of Renters is Big Business on Wall Street
As Homeownership Slips Further Out of Reach, A New Lawsuit Shows How Proptech Companies and Corporate Landlords Conspire to Fleece Tenants
Towards Justice and Protect Borrowers have previously documented how so-called “proptech” (that is, technology for property owners) often amounts to little more than a set of tools that empower bad actors to target and drive up costs for already-struggling renters. In February, our organizations exposed how predatory creditors are cashing in on America’s housing crisis with hugely expensive “Rent Now, Pay Later” loans. In addition, advocacy from Protect Borrowers has helped expose how the rental credit-card-slash-payment-platform Bilt has actively hurt renters through allegedly widespread mismanagement in the absence of federal oversight. Other organizations, such as the National Consumer Law Center, have also done key work to identify ongoing harms that junk fees cause in the rental market.
These are just a few examples of the booming generation of Wall Street- and Silicon Valley-backed companies and products that have set out to make a buck off the back of struggling renters. When these proptech companies aren’t demanding that consumers pay ever-increasing fees, they are mismanaging working people’s finances with impunity. It’s just the latest example of an economy that prioritizes extraction over actually helpful innovation.
Some folks in power get it. For example, we have already seen elected officials like New York Mayor Zohran Mamdani make important efforts to target “rental ripoffs.” Actions along these lines—with a laser-focus on addressing rental junk fees and the proptechs that help drive them—must be a key component of any affordability agenda.
A new lawsuit filed by our friends at Towards Justice adds to the growing scope of that work. In particular, Towards Justice took action against Entrata, a massive property management software company that offers a host of proptech products including “rental reporting” through its RentPlus by RentDynamics product. Entrata recently received a $200 million investment from funds managed by Blackstone and, last week, announced plans to go public. Towards Justice’s important lawsuit shows exactly why the practice of paying companies to furnish renters’ payment records to credit bureaus should be on any enforcement agency, regulator, and/or elected official’s radar.
Toward Justice’s lawsuit against Entrata shows precisely how proptech products target vulnerable renters. The lawsuit alleges that Entrata provides a kickback to landlords for auto-enrolling their tenants in RentPlus at a cost to the tenants of over $100 a year and possibly generating hundreds of thousands of dollars in revenue for landlords, all while requiring tenants to notice and affirmatively opt out of the monthly charges in order to avoid them. In fact, Entrata’s own website appears to show that the company switched from opt-in to opt-out for these charges precisely because consumers were opting out of them.
Once a month, RentPlus report renters’ on-time payments to credit bureaus with the promise that this will improve their credit scores in the future. Renters who fall behind on their rent receive no reporting services but still have to pay. Plaintiffs allege that these practices violate the Credit Repair Organizations Act (CROA) and state laws against unfair and deceptive acts and practices.
Proptech Companies Make Big Promises, Harvest Junk Fees from Renters
The CROA is a federal consumer protection statute that specifically recognizes how predatory the promise of improved credit can be when it is made to low-income and financially struggling people. Yet this is precisely what rental reporting companies do: promise that they can “improve” down-and-out people’s credit, sometimes at a cost of hundreds of dollars a year, while often failing to deliver. Recognizing how harmful credit repair products can be, Congress and many state legislatures have provided a suite of protections against those who promise people better credit in return for cash. In particular, CROA offers working people protections against companies charging so-called “advance fees,” provides safeguards against deceptive practices, and requires that companies make critical disclosures to inform people of their right to walk away from products that frequently prove to be entirely worthless.
Certain fintech executives and their investors may not want those protections to exist. Unfortunately for them and despite whatever their well-paid lawyers may insist, those protections are settled matters of statute enshrined into law decades ago. Don’t take our word for it—take the word of the Federal Trade Commission, which took action against one of these companies only a few years ago for their widespread illegal practices.
With those protections in mind, this lawsuit helps show how to take on these dubious products as part of a larger nationwide crackdown on the rental junk fees that are making life even less affordable for everyday Americans.
This lawsuit also helps illustrate how dark the neoliberal dream of “rent reporting” is: one centered around credit, debt, and a world of secret dossiers that govern nearly every aspect of our lives. In that world, each month becomes a cycle of paying money, taking out loans, working in a job that one is too leveraged to leave, and repeating. Then, some people will have to pay additional money or take on more debt, all to try to improve a magic score that governs how much they pay on the loan for the car they need to go to work, whether they can get a roof over their kid’s head, and even whether they can get a job.
When you look past the corporate smoke and mirrors, you see how much of a sham this all is. Promises of a prized future marked by “better credit” for working people run into the stark reality of businesses out only to make a buck. One need not look further than the shady gap between what these companies tell landlords and what they market to renters.
One of the big rent reporting players got caught saying the quiet part out loud in a so-called “success story” marketed toward landlords on their website (and in a larger case study):
This quote gives away the game: when landlords run up against consumer protections while trying to squeeze struggling tenants, rent reporting companies advertise their product to landlords as a coercive debt collection “solution.” That way—just as in the medical debt space—credit reporting becomes yet another tool for companies to exert power over working people’s lives.
Bad Apples, or a Totally Broken Market?
The proptech field—and particularly the rental reporting market—is littered with companies finding creative, horrifying ways to rip people off.
Take RealPage, the same company accused of price-fixing that cost Americans as much as $3.8 billion. RealPage has a full suite of proptech products for both consumers and landlords, from AI-tenant screening to newfangled security deposit replacement products, to rental payday loans and, yes, to rent reporting.
Just like Entrata, RealPage has made clear representations through its lender subsidiary, Livble, around the supposed credit benefits of its rent now, pay later loans:
Elsewhere, RealPage advertises that its rent reporting program can help consumers “build your credit profile” for a monthly fee.
From its website, RealPage appears to be charging people in advance with promises to improve their credit. However, the disclosures required for companies providing credit repair services, or providing other key consumer protections as required under the law, appear to be missing from its website.
Going after RealPage’s algorithmic price fixing was a good start. However, many of this company’s consumer-facing products also warrant additional scrutiny.
And RealPage isn’t the only company driving up costs. Law enforcement should also look into at least the following companies, which are otherwise generally able to hide behind arbitration agreements and class-action waivers that keep the public out of court:
Boompay: Boompay (the company that published the Romulus Management case study above) is a rent reporting company that advertises to landlords how furnishing people’s rent payments to credit bureaus can “Manage delinquencies” and “Proactively deter late payments.” The company charges renters $60 per year for ongoing furnishing, and offers an additional $25 one-time fee for the furnishing of past payments. Boompay allows landlords to make it so that renters can have “no option to opt in or out” of credit reporting, even when landlords report both on-time and late or missed payments, and Boompay boasts that landlords can “create an ancillary revenue stream” by requiring renters to foot the bill for that furnishing (that is, through kickbacks, just like the ones in the complaint filed today). The company targets its advertising at people likely to be relatively more precarious in their housing situation, including people in manufactured housing, student housing, and rent-to-own housing.
Rental Kharma: Rental Kharma is a consumer-facing rent reporting company notable mostly for the astronomical cost of its credit reporting service. In particular, the company charges its likely low-income users an initial $75 fee to “Report All Past Rent at Current Rental,” then an additional $8.95 a month for “Ongoing Reporting.”
Esusu/Affirm: Esusu is a finance app that charges users a fee to access a basket of personal finance products including rent reporting. Esusu is also now in the Rent Now, Pay Later game, both through its own in-house rent splitting loan product and through a separate product it offers through a partnership with the point-of-sale lender Affirm. That means consumers are paying $120 a year to access these supposed benefits that include the promise of credit repair—which is exactly what Congress was trying to address in passing the CROA.
Foxen/Rentistry: Foxen is a company that offers landlords a suite of proptech products, from its rent reporting system called “Rentistry” to a sometimes mandatory damage insurance program for renters called “Waiver.” Foxen specifically touts rent reporting as a way to enforce payment, advertising that it is valuable for “ensuring timely payments for landlords,” and notes how the cost imposed in renters and split between landlords and Foxen can help those landlords “generate ancillary property income.” Renter testimonials show how the massive fees from these add-ons can increase working people’s rent bills by hundreds of dollars per month.
Now is the time for an all-of-the-above approach to addressing these harmful rent reporting products. We need a sweep across the industry to crack down on the illegal practices companies use to prey on struggling tenants, and to get people their money back for illegal advance fees. We need state attorneys general to wake up to the fact that they already have the power to enforce CROA, and they need to get to work using that law on behalf of struggling tenants who were ticked so that a company could make a quick buck. That’s what a true affordability agenda is about.
Ben Kaufman is a Senior Fellow at Protect Borrowers. He writes a weekly column for IN DEBT called “This Week In Debt.” Ben previously worked at the Consumer Financial Protection Bureau.
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