DOJ alleges RealPage, landlords coordinated to raise millions of rents

WASHINGTON − The Justice Department and attorneys general from eight states filed a lawsuit Friday alleging a Dallas company, RealPage, collected sensitive information from landlords nationwide that allegedly made it easier for them to coordinate and raise prices for millions of renters nationwide.

RealPage provides software to landlords to help manage 16 million rental units nationwide, largely in the Sun Belt and South. The federal lawsuit filed in North Carolina alleges RealPage holds a monopoly in what is called "revenue management software" for landlords because the company controls 80% of the market nationwide.

The lawsuit contends that by sharing sensitive information from landlords about rents, leases and vacancy rates, RealPage helps them collude to avoid competition and raise prices. Without RealPage’s information and recommendations about the rents that competitors are charging and the vacancies that are available, landlords are able to charge higher prices or avoid offering concessions such as a month without rent, according to the lawsuit.

“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 Garland said.

RealPage didn't immediately respond to a request for comment.

RealPage processes the information through algorithmic pricing software that generates recommendations for rental pricing. The lawsuit cited examples of how RealPage and landlords allegedly used the information they shared.

A RealPage executive told a landlord that using competitor data could help identify where a landlord “may have a $50 increase instead of a $10 increase for the day,” according to the lawsuit.

The lawsuit also quoted a landlord describing RealPage’s software. “I always liked this product because your algorithm uses proprietary data from other subscribers to suggests rent and term,” the landlord said. “That’s classic price fixing.”

"The impact of the conduct is extensive," said Assistant Attorney General Jonathan Kanter, head of the department’s antitrust division. “As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents."

Garland said housing costs are the biggest expense Americans face month to month, and the alleged collusion between RealPage and landlords kept prices higher than they would have been otherwise.

"Everybody knows the rent is too damn high and we allege this is one of the reasons why," Garland said.

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First-ever algorithm-based antitrust lawsuit

Justice Department officials said said this was the first civil case where the government alleged an algorithm was the method used for allegedly violating federal law. Kanter hired data scientists and researchers to investigate allegations of this sort of technological collusion and the lawsuit resulted from a nearly two-year investigation.

“By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices − undermining competition and fairness for consumers in the process," Deputy Attorney General Lisa Monaco said. "Training a machine to break the law is still breaking the law."

States participating in the lawsuit include: California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington.

Biden's Justice Department's antitrust agenda

The lawsuit is the latest Justice Department fight against consolidation of business that the government contends reduces choices for consumers and drives up prices, since President Joe Biden took office.

Google illegally used its search engine superiority to monopolize online searches to stifle competition, a federal court ruled on Aug. 5 .

The department sued Live Nation Entertainment, the parent company of Ticketmaster , in May alleging it monopolized live events. The lawsuit seeks to lower prices for fans and open venue doors to more musicians.

The department sued Apple in March alleging the company monopolized smartphone markets , making it harder for consumers to switch phones, stifling innovation and imposing higher costs on developers and businesses.

Vice President Kamala Harris, the Democratic nominee for president, recently announced a plan to combat high housing prices by building 3 million more homes.

Lael Brainard, deputy director the National Economic Council at the White House, said the President Joe Biden and Harris don’t have a comment on the lawsuit. But she said the administration has made clear that “no one should pay higher prices because of corporate lawbreaking.”

“The President and Vice President know that too many Americans feel squeezed by high rents, and they are working every day to bring down housing costs,” Brainard said. “We continue to take all available actions to lower housing costs, from enacting the largest increase in federal rental assistance in decades to freeing up federal lands for affordable housing.”

This article originally appeared on USA TODAY: DOJ alleges RealPage, landlords coordinated to raise millions of rents