The rental market in the US has always been a subject of scrutiny, especially when it comes to the escalation of apartment prices. Many renters have sensed that there might be something dubious happening behind the scenes, and a recent civil lawsuit filed by the US Department of Justice has shed light on the possible culprit – RealPage.
RealPage is a Texas-based company that specializes in providing commercial revenue management software for landlords. This software is designed to assist in setting the prices of apartments by analyzing rental rates and lease terms. However, the DOJ alleges that the RealPage algorithm goes beyond simple assistance and actually encourages coordination among landlords, stifling competition in the process.
The reach of RealPage is vast, with the company controlling a staggering 80 percent of the market for software of its kind. This software is used to determine prices for approximately 3 million units across the country. Multiple lawsuits have already been filed against RealPage, including claims from the state of Arizona and Washington, DC, where the software is said to price over 90 percent of units in large apartment buildings.
The US Department of Justice’s civil lawsuit against RealPage represents a significant escalation in legal action against the company. It is the first time that the DOJ has taken civil action against a company for algorithm-enabled price-fixing. RealPage executives are quoted in the complaint acknowledging the anticompetitive nature of their product, further adding fuel to the fire.
Despite the mounting allegations, RealPage has vehemently denied any wrongdoing. The company has gone as far as publishing a detailed pamphlet and FAQ page on its public policy website to address the accusations. RealPage claims that its revenue management software benefits both housing providers and residents, dismissing the DOJ’s claims as “demonstrably false information.”
Deputy Attorney General Lisa Monaco made it clear that algorithms are not exempt from the law, emphasizing that RealPage’s algorithmic practices have crossed legal boundaries. With the DOJ taking a stand against the company, the future of RealPage’s pricing software remains uncertain.
The allegations against RealPage raise important questions about the fairness and legality of algorithmic pricing in the rental market. As the legal battle unfolds, it will be interesting to see how the company responds and whether changes will be made to ensure a more transparent and competitive rental market for all.
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