RealPage Lawsuit Alleges Landlord’s Software Shares Data To Raise Rents Nationwide

DOJ and several states indicate that landlords are sharing competitive information and conspiring to raise rental prices nationwide using RealPage software’s algorithm.

The U.S. Department of Justice (DOJ) and a number of different state attorneys general have joined together to pursue a lawsuit over RealPage, a property management software that is allegedly being used to manipulate rental prices among a number of different major landlords, who control millions of properties nationwide.

An amended complaint (PDF) was filed in the U.S. District Court for the Middle District of North Carolina on January 7, naming RealPage, Inc., Greystar Real Estate Partners LLC, Blackstone’s LivCor LLC, Camden Property Trust, Cushman & Wakefield Inc. and Pinnacle Property Management Services LLC, Willow Bridge Property Company LLC and Cortland Management LLC as defendants.

According to the lawsuit, RealPage and the landlords are using the software to illegally conspire to set high rent prices using artificial algorithms, presenting claims on behalf of the U.S. government, as well as the states of North Carolina, California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, Oregon and Washington.

“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division said in a press release issued the day the lawsuit was filed. “Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country.”

The RealPage lawsuit alleges that landlords are conspiring with the software company, which is being used to set rents for  more than 1.3 million rental units in 43 states and the District of Columbia. The DOJ indicates that the software shares competitively sensitive information and allows landlords to communicate with each other about rent, occupancy and other topics that helped them fix high prices.

For example, some landlords coordinated with others about recent renewal rates, upcoming approaches to pricing, and plans for price increases, according to the lawsuit. They also joined “user groups” hosted by RealPage, where landlords discussed future rent increases, and called and emailed each other to coordinate pricing schemes.

The DOJ has proposed a consent decree (PDF) with one of the defendants, Cortland Management, to resolve claims in return for the company’s cooperation in the investigation. The consent decree would bar Cortland from using competitors’ competitively sensitive data to run pricing models, using third-party software to price apartments without the supervision of a court-appointed monitor and restricts the company from soliciting, disclosing or using any competitively sensitive data with any other property manager to set rental prices.

Cortland oversees more than 80,000 rental units in 13 states.

Renter Lawsuits Against RealPage

In addition to claims being pursued by state and federal governments, a growing number of individual renters are also pursuing RealPage lawsuits for a variety of reasons, raising similar claims about the alleged unfairness and inaccuracies of the software’s algorithms.

In a complaint (PDF) filed last month in the U.S. District Court for the Middle District of Florida, a former military veteran indicates RealPage’s software failed to distinguish her, who had no criminal record, from her twin sister, who had two felonies, resulting in her getting denied multiple apartments based on the inaccurate information.

“Plaintiff is a disabled veteran on a fixed, but dependable source of income and would be an excellent tenant. Plaintiff and her family need to find an apartment immediately,” the lawsuit states. “Plaintiff and her family have been crammed into Plaintiff’s grandmother’s house for months, unable to rent, which causes substantial strain on Plaintiff and her family.”

The lawsuit accuses RealPage of violating the Fair Credit Reporting Act.