The U.S. Division of Justice on Friday sued a serious actual property agency, alleging the corporate’s algorithmic software program allows landlords throughout the nation to set lease at artificially excessive charges.
The lawsuit, joined by a number of states together with California, focuses on software program from Texas-based firm RealPage. The software program is utilized by many landlords to set lease costs for each vacant models and renewal charges for present tenants.
In a very aggressive market, authorities mentioned property homeowners can be pressured to compete with one another, serving to to drive down rental prices for Individuals.
Nonetheless, in response to the lawsuit, RealPage enabled the alternative.
When changing into a shopper, supposedly competing landlords share nonpublic data — reminiscent of occupancy and rents on executed leases — with RealPage, which then makes use of that knowledge to suggest rents at particular person properties.
“As Individuals wrestle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” Assistant Atty. Basic Jonathan Kanter mentioned in a press release.
RealPage didn’t instantly return a request for remark.
The corporate beforehand referred to as related allegations false and deceptive, saying shoppers can decline its suggestions, which at occasions embody dropping lease.
However in its grievance, the Justice Division pointed to cases the place RealPage described its software program as a instrument for maximizing lease and outperforming the market. Authorities additionally alleged the corporate made it tougher for landlords to reject its suggestions than settle for them.
“There may be higher good in all people succeeding versus primarily attempting to compete in opposition to each other in a approach that truly retains the whole business down,” a RealPage government mentioned, in response to the lawsuit.
At one other level, RealPage described its instruments as guaranteeing landlords are “driving each attainable alternative to extend worth even in probably the most downward trending or surprising situations,” the grievance says.
Anti-trust enforcement has been a spotlight for Biden Administration. The Justice Division has filed go well with in opposition to main firms reminiscent of Google and Apple, alleged they engaged in anti-competitive habits.
Vice President Kamala Harris has additionally criticized using lease setting algorithms whereas working for president.
In a press release, Atty. Gen. Merrick B. Garland mentioned the Justice Division will proceed to aggressively implement anti-trust legal guidelines.
“Individuals shouldn’t need to pay extra in lease as a result of an organization has discovered a brand new strategy to scheme with landlords to interrupt the regulation,” Garland mentioned.
