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• Government Actions:

  Government Action: BBB reports on known government actions involving business’ marketplace conduct:

  MA AG Reaches Settlement Against Real Estate Company EasyKnock For Deceptive Practices That Stripped Consumers Of Home Equity
  

  The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

  On 12/05/2023, Massachusetts Attorney General Andrea Joy Campbell announced a precedent setting settlement, via an assurance of discontinuance (AOD), with the “PropTech” company EasyKnock, for engaging in an unlawful sale-leaseback scheme. The settlement resolves allegations that the company 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. According to the AG’s Office, EasyKnock then violated laws designed to protect tenants, including by charging unlawful and untimely fees and failing to make necessary repairs. The AG’s Office alleges that this unfair and deceptive sale-leaseback scheme violated Massachusetts consumer protection law.  
  
  Under the terms of the settlement, EasyKnock has agreed to permanently cease its unfair and deceptive “sale-leaseback solution” business in Massachusetts and to undertake changes to their business practices, including returning tens of thousands of dollars of improperly held funds to consumers, lowering rents for certain existing tenants, and complying with landlord-tenant laws. Additionally, EasyKnock will make a payment of $200,000 to the Commonwealth. Notably, the AG’s settlement has set a precedent that will reinforce efforts to protect consumers from companies who similarly bamboozle consumers out of their hard-earned home equity. 
  
  “PropTech” companies like EasyKnock operate under an emerging business model that uses technology like AI and big data to conduct real estate transactions, including complex and confusing ones such as EasyKnock’s “sale-leaseback solutions.” Unfortunately, such technology can be used to target and exploit vulnerable “house-rich, cash-poor” consumers, who, despite having significant home equity, have little cash income or savings. 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.  
  
  An investigation by the AG’s Office 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. The investigation also 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. Consumers ended up saddled with complex and lopsided terms which they did not always fully understand. 
  
  The AG’s Office also found that EasyKnock violated Massachusetts landlord-tenant law by charging up-front fees and deposits to its tenants far in excess of the legal maximum. It also failed to consistently maintain its properties as required under the state sanitary code, and illegally shifted the costs of repairs to tenants. Additionally, EasyKnock illegally charged tenants late fees prior to 30 days and illegally charged tenants for water. Under the terms of the settlement, EasyKnock will ensure compliance with landlord-tenant laws and lower rental amounts for existing tenants.  

  A monetary payment of $200,000 will be paid by EasyKnock, Inc. to the Massachusetts Attorney General's Office.

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• Pending Government Action:

  Government Action: BBB reports on known government actions involving business’ marketplace conduct:

  MI AG Takes Action Against EasyKnock For Deceptive Business Practices
  

  The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.

  On 5/22/2024, Michigan Attorney General Dana Nessel announced that her department has sent a notice of intended action (PDF) to EasyKnock, Inc. (EasyKnock), ordering the sale-leaseback company to cease and desist from engaging in unlawful business practices. The Department alleges the company offers “Sell & Stay” transactions, targeting financially distressed homeowners with low credit and high home equity in an effort to strip them of their home equity and homes. 
  
  In the transaction, homeowners sell their homes to EasyKnock and remain in their homes as tenants under a lease agreement with the company for up to five years. While EasyKnock represents that homeowners will receive 100 percent of their home’s value, the Department alleges that homeowners will receive only a fraction of that value in cash after deductions are made for processing fees, closing costs, and repair holdbacks.   
  
  Homeowners have the option to repurchase the home from EasyKnock, but this will likely require access to traditional financing that EasyKnock consumers typically lack. Repurchasing the home is made more difficult by annual increases in the monthly rent and repurchase price.  Ultimately, if the homeowner cannot repurchase their home, it will be sold to a third party. EasyKnock recoups their initial investment through the second sale of the home and profits from processing fees, option fees, and rent collected during the time of the agreement.     
  
  The Department has also received information that EasyKnock has made misrepresentations or misleading statements to pressure homeowners into transactions, caused confusion about escrow fund disbursements, and failed to make necessary home repairs in a timely manner. 
  
  Consumers are encouraged to place complaints directly with the Consumer Protection Team.   
  
  Consumer Protection Team
  P.O. Box 30213
  Lansing, MI 48909
  517-335-7599
  Fax: 517-241-3771
  Toll-free: 877-765-8388

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