WASHINGTON — The Justice Department has filed a civil lawsuit against the real estate company RealPage. The lawsuit alleges that the company’s software uses landlord data to artificially inflate the price of rent across the United States by quelling competition in the market.
According to the complaint, the Texas-based company uses nonpublic data from landlords to train RealPage’s algorithm for pricing recommendations, creating a “vast scheme to subvert the competitive process,” one Justice Department official said.
“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 in a statement Friday. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents.”
According to the complaint, the software uses non-public data provided by landlords to see what competitors are charging or offering to maximize landlords' charges and other ways of making more money from renters.
“Landlords and RealPage recognize that they have multiple levers that they may otherwise have to use to win in a free market,” the official said. “RealPage makes it so they don’t have to fight as hard.”
The complaint is unique in its allegation that an algorithm created by the company violates antitrust laws, Justice Department officials say, but still represents “one of the oldest” examples of violating antitrust laws in the United States.
The lawsuit from the Justice Department comes amid a rise in corporate landlords – companies that own large numbers of rental units – a fact that was central to the case.
“It is not far from our minds that all of this collusion is occurring against the backdrop of…a concentration of corporate landlords,” one official said of the complaint, “of people being evicted at higher rates when their landlords are corporate landlords who can afford to use this kind of software.”
The software, which the Justice Department says runs a monopoly on rental management software, is used in managing 3 million rental units across the United States, most of which are in Southern states.
“In a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms, and other dimensions of apartment leasing,” the Justice Department said in announcing the charges. “RealPage also uses this scheme and its substantial data trove to maintain a monopoly in the market for commercial revenue management software.”
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