The U.S. Department of Justice (DOJ) sued RealPage on Friday after biennial investigation that included an unannounced FBI raid on a nationwide corporate landlord. The Justice Department alleged that Richardson, Texas-based RealPage, which sells real estate software, reduced competition among landlords and artificially inflated rents for millions of tenants across the country.
“We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and adjust rents,” Attorney General Merrick B. Garland said in a statement. press release.
The Department of Justice filed 115-page criticism in the U.S. District Court for the Middle District of North Carolina on Friday. The antitrust lawsuit details how RealPage signed agreements with landlords who would otherwise have been competitors and collected confidential, detailed information about rent prices, lease terms, amenities and occupancy rates.
RealPage allegedly fed that information to its AI-powered algorithm, which gave landlords recommendations on how to set rental prices and lease terms. The Justice Department also accused the company of ensuring that landlords accepted its recommendations by sending pricing consultants to meet with them for “settlement discussions” and adding an “auto-approval” feature that robotically approved price increases for landlords.
In 2020, RealPage he said The company’s software collected data on 16 million of the 22 million investment-grade rental apartments in the U.S., indicating the broad reach of its operations.
U.S. Attorney General Merrick Garland (center), Assistant U.S. Attorney General Lisa Monaco (left), and Acting Assistant U.S. Attorney General Benjamin Mizer (right). Photo Credit: Anna Moneymaker/Getty Images
“While 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 determine how much Americans pay to rent their homes.”
The Justice Department filed suit with the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. The attorneys general of the states Arizona AND Washington, DCTo have legal steps have already been taken against RealPage this 12 months.
IN statementRealPage said the DOJ’s claims are “baseless” and “will do nothing to make housing more affordable.” The lawsuit “seeks to blame pro-competitive technology,” the company said.
The nonpartisan, nonprofit American Economic Liberties Project (AELP) took a different stance. In an emailed statement to EntrepreneurAELP Senior Counsel Lee Hepner pointed to RealPage’s own marketing efforts, highlighted by the Department of Justicewhich stated that the company “used every possible opportunity” to raise prices.
“Working people have enough trouble meeting their daily needs without RealPage bragging about taking ‘every opportunity’ to raise rents,” Hepner said.