Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters
The Justice Department on Friday filed an antitrust lawsuit against RealPage, a property management software provider, alleging it enabled a collusion among landlords to inflate rents for millions of Americans.
The complaint claims the Richardson, Texas-based company and its competitors engaged in a price-fixing scheme by sharing nonpublic, sensitive information, which RealPage’s algorithmic pricing software used to generate pricing recommendations.
The company replaced competition with rent coordination to the detriment of renters across the U.S., according to the suit, monopolizing the market through its revenue management software which was used by landlords to maximize rent costs.
The DOJ is joined by the attorneys general of California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington. The complaint alleges that RealPage violated sections 1 and 2 of the Sherman Act, an antitrust law.
“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,” Attorney General Merrick B. Garland said in a statement Friday.
“We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. Using software as the sharing mechanism does not immunize this scheme from Sherman Act liability, and the Justice Department will continue to aggressively enforce the antitrust laws and protect the American people from those who violate them.”
Deputy Attorney General Lisa Monaco said RealPage violated a century-old law in a modern way, by using an AI-powered algorithm to coordinate rent prices, “undermining competition and fairness for consumers in the process.”
“Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all our legal tools to ensure accountability for technology-fueled anticompetitive conduct,” she said in a statement.
RealPage claims the allegations against the company are false, and insists that RealPage customers decide their own rent prices and can reject the algorithm’s recommendations. The company added that it uses data responsibly.
“RealPage’s revenue management software is purposely built to be legally compliant, and we have a history of working constructively with the DOJ to show that,” a spokesperson for the company said in a statement to CBS News.
The lawsuit comes as Americans struggle to afford necessities from housing to groceries, with high housing costs contributing to persistent inflation.
“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Today, we filed an antitrust suit against RealPage to make housing more affordable for millions of people across the country. Competition – not RealPage – should determine what Americans pay to rent their homes.”
RealPage acknowledged that its product was designed to maximize profits for landlords, according to the suit, by describing it as “driving every possible opportunity to increase price.”
A landlord praised RealPage’s software, saying they liked it because the algorithm “uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”
— CBS News
