Residential sale-leaseback platform EasyKnock is under fire from the Massachusetts Attorney General’s office.
In a news release last Tuesday, Attorney General Andrea Joy Campbell announced that she had entered into a settlement with EasyKnock for what her office alleged was deceptive practices that stripped consumers of their home equity.
Campbell’s office claims that EasyKnock “engaged in an unfair and deceptive equity-skimming scheme that involved purchasing the homes of cash-strapped consumers at bargain-basement prices and then renting them back to the consumers, at times for unfair rents,” in violation of the state’s consumer protection law. In addition, her office alleges that EasyKnock violated some of Massachusetts’ landlord-tenant laws.
“I am proud of the leadership of my team in this precedent-setting settlement with EasyKnock,” Campbell said in a statement. “We will continue to protect consumers, especially in the housing sector.”
EasyKnock, which is led by Jared Kessler, did not immediately return a request for comment.
Under the terms of the settlement, EasyKnock has agreed to permanently end its sale-leaseback solution in Massachusetts, pay $200,000 to the state, return “tens of thousands of dollars of improperly held funds” to consumers, and make changes to its business practices. Some of these changes include lowering rents for some existing tenants and complying with state landlord-tenant laws.
According to the attorney general’s office, their investigation found that “EasyKnock targeted consumers with online advertisements that used loan-like language and failed to adequately disclose that the company’s products require the consumer to sell their home to EasyKnock.”
In addition, the Campbell’s office also claims that the investigations found that EasyKnock “deceived consumers about market rent and engaged in bait-and-switch tactics, changing the terms of its contract at the last minute to consumers’ detriment.” The attorney general’s office states that these practices meant that consumers ended up with “complex and lopsided terms” that they did not always fully understand.
The attorney general’s office also stated that its investigation found that EasyKnock violated Massachusetts’ landlord-tenant law by allegedly charging tenants upfront fees and deposits that were “far in excess of the legal maximum,” charging tenants for the cost of property repairs and water, and charging tenants late fees prior to a bill being 30 days past due. Under the terms of the settlement EasyKnock must comply with all landlord-tenant laws.
In the release, Campbell’s office claims that the technology used by EasyKnock and other proptech firms can be used to target and exploit “house-rich, cash-poor” consumers.
“Some PropTech companies, such as EasyKnock, take advantage of these consumers by offering cash up front in exchange for significantly larger amounts of home equity,” the release states.
In an emailed statement, an EasyKnock spokesperson denied the allegation.
“The Company believes that its past transactions and business practices were at all times lawful and appropriate, and denies any allegations to the contrary. Nonetheless, EasyKnock entered into this agreement to avoid the time, expense, and distraction of protracted litigation, and in the process, allow the Company to remain focused on its strategic priorities,” the spokesperson wrote. “We disagree that the settlement is a win for consumers and with any characterization of it as protecting consumers from selling at bargain-basement prices.”
According to the spokesperson, EasyKnock had voluntarily stopped offering its sale-leaseback product in the state.
“EasyKnock continues to focus on evolving into a single platform offering access to liquidity solutions throughout the spectrum of residential homeowner needs across buying, owning, and selling,” Jarred Kessler, the CEO and founder of EasyKnock, said in a statement.
Since the start of the year EasyKnock has acquired three other proptech startups, including struggling power buyer firm Ribbon, home maintenance company Onder, and home equity investment firm Balance Homes.
