The U.S. Department of Justice and eight state attorneys general have filed an antitrust suit against the real estate software company RealPage accusing it of colluding with landlords to decrease competition and artificially inflate rental prices.
The complaint alleges that the Texas-based company feeds nonpublic information about rent rates and lease terms between competing landlords into its algorithms, which then recommend rate increases to landlords based on their competitors’ information. The result, the DOJ says, is that landlords don’t compete against each other to attract tenants and rents go up across entire markets.
“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 in a statement. “Training a machine to break the law is still breaking the law.”
According to the suit, RealPage executives and its landlord customers openly discussed price fixing with the company’s products. “I always liked this product [AIRM] because your algorithm uses proprietary data from other subscribers to suggest rents and term,” one landlord wrote to the company, according to the DOJ’s complaint. “That’s classic price fixing….”
Another landlord that used RealPage’s YieldStar algorithm allegedly told the company that within 11 months of adopting the tool they had increased rents by more than 25 percent and had brought competitors prices up as a result. A RealPage executive allegedly responded that it was a “great case study,” according to the complaint.
The company’s influence on national rental prices appears to be massive. Between January 2017 and June 2023, more than 85 percent of the final floor plan prices set by landlords nationally were within 5 percent of the prices RealPage’s algorithms recommended, according to the lawsuit. The company’s software was allegedly designed to make price fixing nearly automatic, with default features enabled that automatically accept recommended price increases if they fall within certain ranges. “By enabling auto-accept, a landlord functionally delegates pricing authority to Real Page,” according to the lawsuit.
In response to the lawsuit, a RealPage spokesperson told The New York Times that the company’s software was “purposely built to be legally compliant.”
The DOJ’s lawsuit, which was joined by the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, was filed in a North Carolina federal court.
