DOJ and eight states sue RealPage for algorithm-assisted rental price coordination
The Department of Justice and eight state attorneys general sued RealPage Inc., alleging its algorithm facilitated price coordination among landlords by collecting nonpublic rental data and recommending prices designed to maximize rents. RealPage denies wrongdoing, contending its software operates within legal bounds and does not artificially inflate prices.
What happened
The Department of Justice and attorneys general from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington sued RealPage Inc. for designing an algorithm that allegedly helps landlords coordinate rental prices.
According to the complaint, RealPage collected nonpublic information on rent prices, occupancy rates, and lease terms from landlords using the software, then used this data to train an algorithm that recommended pricing designed to maximize the amount landlords could charge.
RealPage staff placed tens of thousands of calls weekly to gather nonpublic rental information. The company held in-person meetings encouraging users to 'push up new and renewal pricing,' escalated any rejected recommendations to company employees, and deployed 'pricing advisors' to persuade property managers to accept recommendations.
Reported impact
The suit alleges RealPage's algorithm enabled landlords to share confidential, competitively sensitive information and align their rents at artificially high levels.
A law professor estimated that 30 to 60 percent of multifamily-building units are priced using RealPage's software.
Index analysis
The lawsuit alleged violations of Sherman Act sections 1 and 2, which prohibit unreasonable restraints on trade and monopolization.
RealPage described itself as 'driving every possible opportunity to increase price even in the most downward trending or unexpected conditions,' according to the suit.
Governance controls
RealPage denied the allegations, arguing through counsel that the software does not drive higher rates than a competitive market would produce and that information sharing is legal.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.