US sues RealPage over rent handling software that allegedly jacked up prices

The Justice Department has filed a lawsuit against the company behind a popular software tool used by landlords to set rental prices. The lawsuit claims that RealPage’s rent recommendation algorithm artificially inflates rental prices and "deprives renters of the benefits of competition in apartment leasing."

The complaint, joined by eight states, accuses RealPage of collecting confidential rental price data from competing landlords who use its software. This data is then allegedly fed into RealPage’s pricing algorithm, which provides rent rate suggestions to landlords.

According to the lawsuit, these suggestions go beyond mere "recommendations." RealPage is also accused of influencing other landlord policies by discouraging concessions and discounts for renters. The software even includes an "auto accept" feature that allows landlords to automatically adjust rents according to the algorithm’s recommendations, effectively outsourcing their pricing decisions to RealPage.

The lawsuit argues that, in a competitive market, landlords would typically decide independently whether to offer concessions to attract renters. However, RealPage is alleged to undermine this independent decision-making process by promoting collective action to eliminate concessions.

Furthermore, the Justice Department claims that RealPage holds a dominant position in the market for commercial revenue management software for multi-family properties, controlling about 80% of the market share. The lawsuit asserts that RealPage's "unlawful agreements" with landlords, along with the sensitive data it collects from them, provide the company with a competitive edge. The Verge contacted RealPage for comment but did not receive an immediate response.

RealPage has been under scrutiny by the Justice Department for some time. Speculation about a potential lawsuit arose after a 2022 ProPublica report suggested that RealPage’s algorithm may have contributed to rising rent prices nationwide.

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