A Texas-based real estate software company has been accused of helping landlords across the nation to artificially raise their rents, thus eliminating competition and harming consumers, according to a federal lawsuit filed by the U.S. Department of Justice and eight U.S. states.
The company, RealPage, uses a subscription-based tool that allows landlords to price their multifamily rental housing units. The lawsuit alleges that the company illegally collects and shares pricing and supply information from competing landlords, according to an Aug. 23 press release by California Attorney General Rob Bonta. California is one of the states that has signed on to the suit.
According to Bonta, the company recommended rent increases to its subscribing landlords, who knew such increases were also recommended to their competitors, which, he said, drove rent prices up even when the supply was high.
“Anticompetitive agreements are illegal, whether done by a human or software program. RealPage misused private and sensitive consumer data to take the competition out of the rental industry, leaving renters no other choice but to pay the intentionally high prices that landlords agreed to set,” Bonta said, according to the press release.
RealPage manages more than 24 million housing units worldwide from offices in North America, Europe, and Asia, according to its website.
The areas in California most affected by the practice were in the Southern California cities of Anaheim, Santa Ana, Irvine, Riverside, San Bernardino, Ontario, Rancho Cucamonga, Temecula, Murrieta, San Diego, and Carlsbad, according to Bonta’s press release.
Attorneys general in Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington also joined the lawsuit.
Through sharing sensitive information such as the pricing and supply of rental units, RealPage eliminated the need of landlords to lower rents to attract tenants, since landlords were able to align their prices among each other and eliminate a need for competition, according to Bonta.
Usually, competition among landlords can result in lower rents, but such sharing of sensitive data by RealPage allowed landlords to align their prices and eliminate such competition, according to the lawsuit.
“This conduct is unacceptable and illegal, and given California’s current housing shortage and affordability crisis, it is causing real harm,” he said.
In California, housing needs have outpaced construction for nearly half a century, while housing costs have continuously risen, resulting in nearly 700,000 Californians being at risk of eviction, according to the press release.
RealPage is accused of violating the federal Sherman Antitrust Act—which makes anticompetitive agreements illegal—and of monopolization and attempted monopolization. Through the sharing of competitively sensitive data, the company removed competitive pressure—which benefits renters—among landlords.
U.S. Attorney General Merrick Garland said the company, through its software, not only recommended rental prices, but also policed landlords who didn’t follow its guidance.
“When the Sherman Act was passed, an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting. Today, it looks like landlords using mathematical algorithms to align their rents,” Garland said in an Aug. 23 press release. “Antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert.”
The lawsuit, filed in the U.S. District Court for the Middle District of North Carolina, seeks to bar RealPage from collecting sensitive data from its landlord subscribers, end the monopoly it has on such data-collection software, and end any practice to increase rents uniformly.
RealPage did not return a request for comment by publication. But in a lengthy six-page statement on its website from June, the company said the allegations were based on “demonstrably false information” and that its software benefits both housing providers and residents. The company also said its software “makes price recommendations in all directions—up, down or no change—to align with property specific objectives.”
RealPage did not return a request for comment by publication. But in a lengthy six-page statement on its website from June related to media reports and other similar litigation filed against it, the company said such allegations were based on “demonstrably false information” and that its software benefits both housing providers and residents.
“The truth shows the distorted narratives and lawsuits have no merit,” the company wrote.
