Landlords could no longer rely on rental pricing software to quietly track each other’s moves and push up rents using confidential data, under a settlement between RealPage Inc. and federal prosecutors to end what critics said was illegal “algorithmic conspiracy.”
The deal announced by the Justice Department on Monday follows a year-long federal agreement antitrust caselaunched during the Biden administration, against the Texas-based software company. RealPage should not have to pay damages or admit to any wrongdoing. The settlement must still be approved by a judge.
RealPage software provides daily recommendations to help landlords and their employees across the country price their available apartments. Landlords don’t have to follow the suggestions, but critics argue that the software helps RealPage’s customers charge the highest possible rent because it has access to a large amount of confidential data.
“RealPage replaced competition with coordination, and tenants paid the price,” said Gail Slater, head of the Justice Department’s antitrust division, who emphasized that the settlement avoided a costly, time-consuming lawsuit.
Under the terms of the proposed settlement, RealPage can no longer use that real-time data to determine pricing recommendations. Instead, the only non-public data that can be used to train the software’s algorithm must be at least one year old.
“What does this mean for you and your family?” Slater said in a video statement. “It means more real competition in local housing markets. It means rental prices determined by the market, not some secret algorithm.”
RealPage attorney Stephen Weissman said the company is pleased the DOJ worked with them to resolve the case.
“There has been a lot of misinformation about how RealPage’s software works and the value it provides for both housing providers and renters,” Weissman said in a statement. “We believe that RealPage’s historical use of aggregated and anonymized non-public data, including rents that are generally lower than advertised rents, has resulted in lower rents, lower vacancies and increased pro-competitive effects.”
However, the deal was dismissed by some observers as a missed opportunity to curb alleged algorithmic price fixing across the economy.
“This case was really the tip of the spear,” said Lee Hepner, senior legal counsel for the American Economic Liberties Project, whose group advocates for government action against corporate concentration.
He said the settlement is riddled with loopholes and he believes RealPages can continue to influence the rental market even if they can only use public rather than private data. He also criticized the fact that RealPages does not have to pay any damages, unlike many companies that have paid millions in fines for their use of the software.
In recent months, more than two dozen property management companies have reached several settlements over their use of RealPage, including Greystar, the nation’s largest landlord, which agreed to pay $50 million to settle a class action lawsuitAnd $7 million to settle a separate lawsuit submitted by nine states.
The governors of California and New York signed legislation last month to crack down on rent-setting software growing list of citiesincluding Philadelphia and Seattle, have passed ordinances against this practice.
Ten states – California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee and Washington – had joined the DOJ’s antitrust lawsuit. These states were not part of Monday’s settlement, meaning they can continue to pursue the case in court.
