The U.S. Department of Justice on Friday filed a lawsuit against RealPage, a property management software company, alleging that it enabled collusion among landlords to raise rents for millions of Americans.
The complaint alleges that the Richardson, Texas-based company and its competitors engaged in a price-fixing scheme by sharing non-public, sensitive information that RealPage’s algorithmic pricing software used to generate pricing recommendations. The rival company replaced rent coordination at the expense of renters across the United States, according to the lawsuit, monopolizing the market through revenue management software that landlords used to maximize rental costs.
The Justice Department 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 shouldn’t have to pay more rent because some company found a new way to plan
with Property owners are breaking the law.“We allege that RealPage’s pricing algorithm enables landlords to share confidential and competitively sensitive information and align their rents,” Attorney General Merrick Garland said in a statement Friday. “The use of software as a mechanism for sharing does not exempt this scheme from Sherman Act liability, and the Department of Justice will continue to vigorously enforce 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 rental rates, “undermining competition and fairness for consumers in the process.”
“Training a machine to violate the law is still a violation of the law,” she said in a statement. “Today’s action makes clear that we will use all of our legal tools to ensure accountability for anticompetitive behavior fueled by technology.”
RealPage claims the allegations against the company are false, insisting that RealPage customers decide their own rental rates and can reject algorithmic recommendations. The company added that it uses data responsibly.
“RealPage’s revenue management software is specifically designed to be legally compliant, and we have a history of constructive engagement with the Department of Justice to demonstrate that,” a company spokesperson 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.
“While Americans struggle to afford housing, RealPage makes 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 lawsuit against RealPage to make housing more affordable for millions of people across the country. Competition—not RealPage—should determine what Americans pay to rent.”
RealPage admitted its product was designed to maximize profits for property owners, according to the lawsuit, describing it as “pushing every opportunity to increase prices.”
One realtor praised RealPage, saying he liked it because the algorithm “uses private data from other subscribers to suggest rentals and lengths. This is classic price-fixing…”
—CBS News’ Robert Legare contributed reporting.
