US Files Lawsuit Against RealPage for Allegedly Inflating Rental Prices

Justice Department Sues RealPage Over Allegations of Rent Price Manipulation

The Justice Department has taken decisive action against RealPage, the company behind a popular software used by landlords to determine rental pricing. The lawsuit, joined by eight states, accuses RealPage of employing a rent recommendation algorithm that not only inflates prices but also undermines competitive dynamics in the apartment leasing market.

The Allegations Against RealPage

According to the official complaint, RealPage is alleged to collect nonpublic rental price data from competing landlords utilizing its software. This sensitive information is then integrated into its algorithm, which provides landlords with suggested pricing strategies.

More Than Just Recommendations

The lawsuit claims that RealPage's involvement goes beyond mere recommendations. The company purportedly influences landlords' policies, aiming to eliminate concessions and discounts that could benefit renters. A troubling feature of the software enables landlords to "auto accept" pricing adjustments based on RealPage’s algorithm, delegating their pricing decisions to the software.

Concerns About Competition

The complaint outlines significant issues regarding competition in the rental market. The DOJ asserts that by encouraging landlords to abandon independent pricing strategies in favor of collective action, RealPage is damaging the competitive landscape. "In a competitive marketplace, each landlord should independently decide whether to offer concessions to attract renters," the complaint states.

RealPage's Market Share and Monopoly Claims

The DOJ's lawsuit also highlights RealPage's dominance in the commercial revenue management software sector for multi-family housing, noting that the company holds approximately 80 percent market share. The alleged "unlawful agreements" with landlords and the private data it acquires create an unfair competitive edge, as stated in the lawsuit.

Background and Ongoing Scrutiny

RealPage has been under scrutiny from the DOJ for an extended period. Speculation regarding potential legal action gained momentum following a 2022 report by ProPublica, which indicated that RealPage’s algorithm might be a contributing factor to soaring rent prices across the United States.

What This Means for Renters and Landlords

This legal battle could have significant implications for both renters and landlords. If the DOJ's allegations hold, it may lead to a reassessment of how rental prices are determined and increase protections for renters in an already competitive housing market.

Conclusion

The Justice Department's lawsuit against RealPage underscores the complex interplay between technology and housing markets. As the case unfolds, market participants will be watching closely to see how the outcome shapes rental practices moving forward.

For more in-depth analyses and updates, stay tuned as this story develops.