Unbundling the “Junk Fee” Debate: Fairness, Fee Restrictions, and Transparency

Executive Summary

“Junk fee” advocacy often combines three different arguments under one label: (1) a fairness claim that a fee is unreasonable or provides too little value; (2) a restriction claim that the fee should be prohibited, capped, or limited to cost; and (3) a transparency claim that required fees should be explained and the full required price should be presented before a prospective resident makes a decision or incurs a charge.

Those arguments may travel together politically, but they are not interchangeable. Multifamily operators should respond to each on its own terms.

Even within the transparency claim, two tasks should not be conflated. Fee-level disclosure addresses the amount, nature, purpose, and mandatory or optional status of individual charges. Total-price display addresses whether the operator has done the math and prominently presented the recurring mandatory amount.

The FTC’s Invitation Homes and Greystar matters have made both concepts important federal enforcement benchmarks, although the orders bind the parties to those cases rather than the industry as a whole. Operators should address those transparency questions directly while evaluating proposed fee restrictions separately and on their own legal, economic, and operational merits.

One Label, Three Different Claims

A CBS News Philadelphia interview concerning proposed “junk fee” legislation illustrates the broader pattern.

Discussing mandatory monthly charges imposed in addition to advertised rent, Philadelphia City Councilmember Rue Landau said:

“At the end of the day, if you had to pay $100 in fees each month, I would rather you tell me the rent is $1,600 a month instead of $1,500, and I can shop around and see if there’s another place on the same block.”

That is a total-price transparency claim. It does not necessarily contend that every charge included in the additional $100 is illegitimate. It asks that the required monthly amount be presented in a way that permits meaningful comparison before a renter commits.

Elsewhere in the same discussion, the proposed policy addresses whether convenience fees may exceed cost, whether a free online payment method must be offered, and whether certain charges should be permitted at all. Those are restriction questions: not simply what must be disclosed, but what a business may charge and under what conditions.

The phrase “junk fee” is therefore frequently used to cover three separate propositions:

1. The fairness or legitimacy claim: The charge is unreasonable, provides insufficient value, or represents an ordinary business expense that should not be imposed separately.

   
   

2. The restriction claim: The charge should be prohibited, capped, limited to actual cost, or accompanied by a no-fee alternative.

   
   

3. The transparency claim: The charge may or may not be permissible, but the renter should receive meaningful information about it and, for recurring mandatory charges, see a calculated total price early and prominently enough to compare alternatives.

A fee schedule can identify charges without doing the math for the renter; an accurate total price can still fail to explain what a particular charge covers.

Advocacy efforts combine these themes in different proportions. New York City’s Department of Consumer and Worker Protection has proposed citywide rules addressing all-in pricing and representations about fees. A comment submitted by the National Consumer Law Center and four other organizations advocates both total-price disclosure and substantive limits on certain rental fees. The arguments overlap, but they do not ask the same question.

Why the Bundle Produces an Incomplete Industry Response

When several claims are combined under one rhetorically loaded label, the natural industry response is often equally broad: the fee supports a real service, the service costs money, residents receive value, and separately stated charges show what residents are paying for.

Depending on the fee, those may be legitimate points. Technology packages, valet trash, pest control, payment processing, package management, and utility billing may involve real costs and operational benefits. Whether those costs should be recovered through rent, a separately stated charge, or some combination is not always self-evident.

But defending the fee does not answer the transparency questions. A fee can be reasonable and included in the displayed total price yet still need clearer explanation so the renter understands its nature and purpose. It can also be fully disclosed and still be subject to a proposed cap or prohibition.

The renter’s question is more direct:

What charges will I pay, what are they for, and when will I know the total amount?

That argument does not depend on proving that every separately stated fee is improper. It depends on the narrower propositions that required charges should be explained meaningfully and should not prevent meaningful price comparison.

Transparency and Fee Restriction Are Not the Same Legal Question

The FTC’s rental housing enforcement matters reinforce the distinction.

The Invitation Homes order requires the total monthly leasing price to be displayed more prominently than other pricing information and, whenever a fee is displayed or disclosed, requires its nature and purpose, amount, and mandatory status.

The Greystar order similarly separates the obligations: a representation about an amount to lease a property triggers prominent display of the total monthly leasing price; a representation about a particular fee triggers specified fee disclosures; and, before charging an initial payment or deposit, the order requires the total price and specified details about all fees and costs. That prepayment trigger is tied to charging an initial payment or deposit, not merely to collecting ordinary contact or application information.

Those orders apply to the defendants in those matters. They nevertheless signal two related expectations: explain individual fees meaningfully and do the math necessary to present the recurring mandatory price.

The FTC’s rental housing fee rulemaking could eventually translate some version of that approach into a generally applicable federal requirement. For now, however, the ANPRM poses questions; it does not contain proposed regulatory text.

The federal signal is only one layer of a varied regulatory landscape. Colorado has combined total-price disclosure, fee-level explanation, and landlord-specific restrictions. Virginia separately addresses first-page lease itemization and, through a broader consumer-pricing statute, total-price advertising. Ann Arbor goes further by requiring mandatory tenancy fees to be included in the base price of rent and prohibiting landlords from charging them separately. New York City has proposed broader all-in pricing rules, while Philadelphia is considering a broader, cross-sector convenience-fee ordinance that would also reach rental housing.

A bipartisan coalition of 27 state attorneys general made the same point from an enforcement perspective in its ANPRM comment. The coalition urged the FTC to establish a federal minimum without displacing state authority and emphasized that existing state unfair-or-deceptive-practices laws may already reach rental-fee conduct.

These statutes, ordinances, proposals, and enforcement theories use different definitions, triggers, exceptions, and remedies. A multistate operator cannot assume that a single federal benchmark answers every state or local question.

The Restriction Debate Is Harder

Once the discussion moves beyond disclosure, the questions become more difficult. Should an application fee be limited to actual cost? Should a payment fee be prohibited unless a comparably accessible free option exists? Should a mandatory service fee be capped? May an operator recover administrative overhead as well as third-party charges? At what point does a restriction become a form of price regulation?

Those questions may turn on the service provided, direct and indirect costs, vendor arrangements, resident choice, state preemption, municipal authority, existing landlord-tenant law, and the consequences of moving the charge into rent. The answers vary by fee type and jurisdiction. This is where operators may have substantial legal, economic, and operational arguments to make—and where those arguments should be evaluated on their own merits.

Transparency Has Two Parts—and Both Can Be Difficult to Execute

The principles are straightforward. Fee descriptions should allow a prospective resident to understand the amount, nature, and purpose of a charge and whether it is mandatory. When recurring charges are mandatory, the advertised monthly presentation should not require the renter to reconstruct the actual required amount from scattered disclosures. In other words, the landlord, not the renter, should “do the math.”

Implementation may be anything but straightforward. Some advertising channels provide limited space or structured fields that cannot accommodate a full fee list, much less a meaningful explanation of each charge. Linked or later-stage disclosures may add detail, but they raise questions about prominence, accessibility, and timing.

Pricing and fee data also move through revenue-management systems, property-management software, websites, listing services, syndication feeds, quoting tools, application portals, leases, and billing platforms. For third-party management companies, the challenge may be multiplied across dozens or hundreds of clients using different fee structures and different names for similar charges.

Property-level variation adds another layer. A charge may be mandatory at one community and elective at another. Utilities may be fixed, allocated, estimated, usage-based, or billed directly. One-time, variable, contingent, and optional charges require different disclosure logic from fixed recurring fees.

The challenge is therefore not simply to “add up the fees.” It is to establish reliable rules for classification and description, total-price calculation and presentation, timing, channel architecture, and consistency across the leasing funnel.

What Multifamily Operators Should Take from the Distinction

Several practical principles follow.

• Identify the claim before responding. Determine whether the issue concerns fee legitimacy, a cap or prohibition, fee disclosure, total-price display, a cost-pass-through limit, or a required free alternative.

• Separate fee disclosure from total-price display. Review whether individual charges are described meaningfully and whether recurring mandatory charges are included in the displayed total. One does not automatically satisfy the other.

• Do not defend a transparency gap by defending the fee. Evidence that a service has value may be relevant to a proposed restriction. It does not establish that the fee was explained or the total price presented early enough.

• Use the FTC orders as federal risk-management benchmarks. They are not a market-wide rule, but operators should understand how their practices compare with both the fee-disclosure and total-price requirements.

• Map applicable state and local law. Identify jurisdictions regulating fee reasonableness, particular charges, disclosure content or timing, or total-price calculation. Questions involving non-Georgia law should be evaluated with counsel licensed in the relevant jurisdiction.

• Evaluate “optional” fees realistically. A fee should not be treated as optional merely because a theoretical means of avoiding it exists. The resident-facing workflow and practical availability of the alternative matter.

• Test the entire leasing funnel. Review how pricing appears on property websites, listing services, quotes, application screens, fee schedules, leases, and billing statements. A complete disclosure in one document may not cure a materially different presentation earlier in the process.

• Coordinate legal analysis with systems capability. Legal, operations, marketing, revenue management, technology, and vendor-management teams need a shared definition of the total price and a process for maintaining it when fees or systems change.

  
  

The Strategic Opportunity

The industry’s best response to “junk fee” proposals is not a single defense of fees as a category. It is a disciplined separation of issues.

Where the concern is transparency, the response should address both the content and timing of fee-level disclosure and the calculation, placement, and prominence of the total price. Where a proposal would cap, prohibit, or restructure a fee, operators can then focus on authority, economics, resident choice, service value, vendor costs, operational feasibility, and unintended consequences.

That is not a concession to the broadest advocacy position. It is a way to avoid weakening legitimate substantive arguments with an unrelated pricing-presentation problem.

The renter’s transparency question remains simple even when implementation is complex:

What charges apply, what are they for, what is the required total—and who has to do the math to find it?

The FTC’s enforcement actions, its pending rulemaking, and the continuing growth of state and local initiatives all point toward the same practical expectation: operators should increasingly expect to explain the components of the price and, for recurring mandatory charges, do the math and display the result.

About the Author

Glen Smith is the founder of Glen Smith Law LLC, a Georgia-based legal advisory practice focused on pricing transparency and fee disclosure practices in the multifamily housing industry. He previously served for more than 26 years in senior in-house legal roles at Greystar and Post Properties.

Disclaimer

This article is provided for general informational purposes and does not constitute legal advice. Glen Smith is licensed to practice law in Georgia. References to laws and regulatory developments outside Georgia are provided as industry context and for issue-spotting purposes. Readers should consult counsel licensed in the relevant jurisdiction regarding specific legal requirements.