In recent years, renters in the United States have noticed a disturbing trend – apartment prices seem to be increasing in tandem across various buildings and cities. The US Department of Justice has now stepped in with a civil lawsuit alleging that RealPage, a Texas-based company specializing in commercial revenue management software for landlords, is at the heart of this issue. According to the lawsuit, RealPage’s algorithm assists landlords in setting prices by gathering rental rate and lease information, then providing a suggested price that promotes coordination among property owners while simultaneously inhibiting competition.
RealPage’s dominance in the market is undeniable, with the company controlling 80% of the software market used to determine prices for approximately 3 million apartment units nationwide. Legal action against RealPage is mounting, with multiple lawsuits already in progress in states such as Arizona and Washington, DC. In the latter case, RealPage software is purportedly utilized to price over 90% of units in large apartment complexes. The company’s algorithmic pricing methods came under scrutiny following a detailed investigation by ProPublica in 2022.
The civil lawsuit filed by the DOJ, joined by the attorneys general of eight states, represents a significant advancement in the legal battle against RealPage. This case stands out as the first civil action where an algorithm is the focal point of the violation. RealPage executives, as purportedly quoted in the complaint, have themselves acknowledged the anticompetitive nature of their product. Despite RealPage’s firm denial of any antitrust allegations, the DOJ remains steadfast in its claim that the company’s actions have violated established laws.
RealPage has vehemently defended its practices, even going so far as to release a digital pamphlet titled “the Real Story” outlining their product’s benefits. The company’s dedicated public policy website features an extensive FAQ section addressing various concerns. However, the DOJ stands firm in its stance that algorithms, such as the one employed by RealPage, are not exempt from legal scrutiny. Deputy Attorney General Lisa Monaco stressed the importance of holding companies accountable for their actions, particularly when they have a substantial impact on consumers.
The allegations levied against RealPage shed light on the potential consequences of algorithmic control in the real estate market. The outcome of this legal battle will undoubtedly have far-reaching implications for both landlords and renters alike. It serves as a reminder that technological advancements must be accompanied by ethical considerations to ensure fair and competitive pricing in the housing industry.
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