The U.S. Department of Justice has announced that it is suing a Texas software company that developed a program that allegedly helps landlords set their rents higher than they otherwise would.
RealPage Inc., a company that sells and collects real estate data, used landlords’ private information to train the company’s algorithm to make price recommendations and maximize the amount landlords can charge, the lawsuit says. Attorneys general from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington have also joined the suit.
“Americans should not have to pay more rent just because a company found a new way to collude with landlords and break the law,” Attorney General Merrick Garland said in a statement Friday. “We allege that RealPage’s pricing algorithm allows landlords to share confidential, competitively sensitive information and adjust their rents.”
The lawsuit alleges that RealPage violated Sections 1 and 2 of the Sherman Act, a federal antitrust law. Section 1 states that business contracts that “unreasonably” restrain trade are prohibited. Section 2 states that any company that monopolizes a market or attempts to do so is guilty of a crime.
According to the lawsuit, RealPage describes itself as a company that “takes advantage of every opportunity to raise prices, even under the most downward or unexpected conditions.” However, the company has denied the allegations, arguing that the information sharing is legal and does not actually lead to price increases.
“The software does not result in higher prices than would be the case in a competitive market,” Stephen Weissman, RealPage’s attorney, told USA Today.
The announcement comes as housing costs across the country are reaching record highs and the cost of living has become a key discussion point in the upcoming 2024 election. Democratic candidate Kamala Harris has promised to build 3 million new homes to reduce housing costs and “limit unfair rental prices.”
“Some commercial landlords work together to set rents artificially high, often using algorithms and price-fixing software. This is anti-competitive and drives up costs,” Harris said in a speech in North Carolina earlier this month.
