The US Department of Justice (DOJ) sued RealPage on Friday after a two years investigation that involved an unannounced FBI raid of a national corporation owner. The DOJ alleged that Richardson, Texas-based RealPage, which sells real estate software, reduced competition among landlords and artificially raised rents for millions of renters across the country.
“We allege that RealPage's pricing algorithm enables landlords to share confidential, competitively sensitive information and harmonize their rents,” Attorney General Merrick B. Garland said in a filing. press release.
The DD presented 115 page complaint in the U.S. District Court for the Middle District of North Carolina on Friday. The antitrust lawsuit details how RealPage signed contracts with otherwise competing landlords and collected sensitive and detailed information about rental prices, lease terms, amenities and occupancy rates.
RealPage then allegedly fed the information to its AI-driven algorithm, which gave landlords recommendations on how to price rentals and set terms for rental agreements. The DOJ also accused the company of making sure owners accepted its recommendations by sending price advisers to meet with them for “accountability talks” and adding an “auto-opt-in” feature so owners would automatically approve price increases .
In 2020, RealPage said his software collected data on 16 million rental units of 22 million investment-grade apartment units in the US, showing its broad reach.
US Attorney General Merrick Garland (C), Deputy US Attorney General Lisa Monaco (L) and Acting Associate Attorney General Benjamin Mizer (R). Photo Credit: Anna Moneymaker/Getty Images
“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to raise rents,” said Assistant Attorney General Jonathan Kanter of the Justice Department's Antitrust Division, adding that “competition — not RealPage — should to determine what Americans pay for their homes”.
The DOJ filed suit with the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. State Prosecutors General for Arizona AND Washington, DCHAVE legal measures already taken against RealPage this year.
In one STATEMENTRealPage said the DOJ's claims were “baseless” and “will do nothing to make housing more affordable.” The lawsuit “seeks to stifle pro-competitive technology,” the company alleged.
The nonprofit American Economic Freedoms Project (AELP) took a different stance. In a statement sent by email to entrepreneurAELP senior legal counsel Lee Hepner noted RealPage's own marketing, emphasized by the DDwho stated that the company used “every possible opportunity” to raise prices.
“Working people have enough trouble making ends meet without RealPage bragging about using 'every possible opportunity' to raise rents,” Hepner said.
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