EasyKnock accused of deceptive practices, hit with fine
The Massachusetts attorney general claimed the "buy-before-you-sell" company targeted financially strained homeowners through its sale-leaseback program.
Proptech company EasyKnock reached a $200,000 settlement last week with Massachusetts Attorney General Andrea Joy Campbell, agreeing to discontinue its sale-leaseback program in the state.
Why was EasyKnock targeted? The settlement addresses allegations that EasyKnock unfairly purchased homes from financially strained individuals at low prices, subsequently leasing the properties back to the owners, sometimes at elevated rental rates. The Office of the Attorney General alleged that EasyKnock "engaged in an unfair and deceptive equity-skimming scheme," violating consumer protection laws in Massachusetts.
The AG's office also accused EasyKnock of using online ads resembling loan offers, manipulating market rent information and modifying contract terms at the last minute.
What does the settlement include? As part of the settlement, EasyKnock agreed to permanently halt its sale-leaseback business in Massachusetts. It also committed to significant changes in its operations, such as refunding tens of thousands of dollars to affected consumers, reducing rents for specific tenants, and ensuring compliance with landlord-tenant regulations. Additionally, the company will pay $200,000 to the state.
What does EasyKnock do? EasyKnock is one of several real estate companies offering a "buy-before-you-sell" program that purports to ease the transaction process for sellers who also need to buy, while also giving agents another avenue to close a sale. EasyKnock CEO Jarred Kessler told Real Estate News in October that his company acts as an "inertia breaker to help get more deals for real estate agents," adding that "they're going to get clients that were otherwise stuck on the sideline."
How has EasyKnock responded? A spokesperson said in an email that the company "believes that its past transactions and business practices were at all times lawful and appropriate, and denies any allegations to the contrary," and they agreed to the settlement "to avoid the time, expense, and distraction of protracted litigation."
EasyKnock also stated that it had voluntarily ended its sale-leaseback program in Massachusetts ahead of the settlement due to "unfavorable business conditions" and had only purchased nine homes in the state.
"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," the spokesperson added.
How does AI play a role? The case sheds light on proptech companies — particularly those in the sale-leaseback business — that employ technology like AI and big data for real estate dealings. While these innovations offer convenience, the Massachusetts AG's office claims that some companies, like EasyKnock, have used them to target financially vulnerable homeowners who may be "asset-rich but cash-poor."