DOJ files rent-fixing lawsuit against corporate landlords' go-to software firm

Julia Conley, Common Dreams
August 24, 2024 

Merrick Garland l(AFP)

Executives at the property management software company RealPage claimed they had the "greater good" in mind when they offered corporate landlords a price-fixing algorithm service, said the U.S. Department of Justice as it filed a lawsuit Friday against the firm—but the scheme allegedly drove rental costs up in communities across the country, contributing to the housing crisis.

The antitrust lawsuit, filed with attorneys general from states including California and Colorado, accused RealPage of using confidential data about its clients to algorithmically determine the highest price renters would pay, using its AI software.

U.S. Attorney General Merrick Garland and other officials said the company has violated antitrust laws by providing the service, which gives corporate landlords recommended rental prices and allows them to align prices with one another instead of having to compete.

Assistant Attorney General Jonathan Kanter said the lawsuit is "best understood in the words of RealPage's own executives," who have said the company's software allows landlords to "drive every possible opportunity to increase price, even in the most downward trending or unexpected conditions."

"RealPage tells landlords that it would prefer everybody succeeding versus essentially trying to compete against one another," said Kanter. "But that's not how free markets work. Competition among landlords, not RealPage, should determine prices for renters."

Garland added that "Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law."

As Common Dreams reported in June, RealPage and the corporate landlords that rely on it has come under the scrutiny of watchdogs including Accountable.US, which found that the six largest property management firms brought in a combined $300 million in increased profits in the first quarter of 2024, thanks largely to rent hikes.

The windfall came as rent prices have skyrocketed by more than 31% since 2019, while wages have gone up by just 23%.

RealPage's algorithm is alleged to have helped fix rent prices for about 16 million rental units across the country, said Accountable.US.

"Today is a good day for renters and families and a bad day for predatory landlords," said Lindsay Owens, executive director of the progressive think tank Groundwork Collaborative. "The Department of Justice is right to take on the affordability crisis that RealPage has been supercharging. Algorithms are being used to unfairly drive up prices for housing, meat, and more. This price-fixing must be stopped."

Caroline Ciccone, president of Accountable.US, said Friday's lawsuit shows that "the Justice Department sees evidence of a major rental price-fixing conspiracy by RealPage that extends to metro areas around the country."

"We've documented how many of the same landlord companies that were sued in the initial rent fixing lawsuit have boasted of massive profits after jacking up rents," said Ciccone. "Any property company that uses RealPage in one of these states should face a serious probe. No renter in America should be price gouged under a potentially illegal rent fixing scheme."

Accountable.US added in a social media post that "while rents soared, RealPage executives bragged about how their software could 'maximize' profits, even in the face of a housing crisis."

Andrea Beaty, research director for the Revolving Door Project, said RealPage's actions have "left tenants across the country paying the literal price of corporate greed, even in the midst of a global pandemic."

"This lawsuit will hopefully usher forth renewed corporate accountability in the rental market beyond RealPage, which is far from the only corporation capitalizing on tenant's struggles to live in safe and affordable homes," said Beaty. "We hope that in addition to the bipartisan set of eight state attorneys general suing RealPage, even more attorneys general will sign on in response to RealPage's actions to drive up rental costs in communities in their states."