Colorado and seven other states on Friday filed a lawsuit with the U.S. Department of Justice accusing property management firm RealPage of coordinating with landlords to drive up rent in a vast price-fixing scheme.
The federal lawsuit says RealPage, a tech firm based in a Dallas suburb, controls as much as 80% of the national market for landlord revenue management software, giving it outsize power to “subvert competition” and distort the multifamily rental market to the benefit of landlords – and to the detriment of renters as housing costs reach record levels of unaffordability.
“It (RealPage) does so openly and directly – and American renters are left paying the price,” the suit reads.
ProPublica was the first to report on the companies practices in a 2022 investigation that found RealPage’s algorithm compiled rent data from competitors, then used that data to recommend rent increases to its customers.
The lawsuit, joined by Colorado Attorney General Phil Weiser, quotes a landlord who describes the company’s product as “classic price-fixing” – the practice of market competitors coordinating to charge customers more, rather than competing for business.
“Renters should benefit from healthy competition between landlords to find an apartment that fits their budget and needs,” Weiser said in a statement. “But RealPage’s software and market dominance have enabled collusion between landlords to fix rents, set the number of apartment available in the market and harm renters by forcing them to pay rents above competitive levels. This anticompetitive conduct is driving rent increases.”
Progressive Democrats in the Colorado legislature this year had sought to ban the use of rent-setting algorithms like RealPage, but the proposal, House Bill 1057, was gutted in the state Senate and eventually killed.
The lawsuit was filed in a U.S. District Court in North Carolina. The attorneys general of California, Connecticut, Minnesota, Oregon, Tennessee and Washington joined Colorado and North Carolina in the suit.
RealPage’s own marketing practices promote its software’s ability to drive up prices and keep them high – even when market conditions would normally lead landlords to cut rent.
The company’s rent recommendations “help curb (landlords’) instincts to respond to down-market conditions by either dramatically lowering price or by holding price when they are losing velocity and/or occupancy,” the company said, according to the lawsuit. “Our tool ensures that (landlords) are driving every possible opportunity to increase price even in the most downward trending or unexpected conditions.”
At one point, a RealPage executive outlined the scheme in explicitly anti-competitive terms, the lawsuit claims. “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down,” the executive said. “If enough landlords used RealPage’s software, they would ‘likely move in unison versus against each other.’”
On its website, RealPage has denied the claims, which have been made previously in other lawsuits across the country.
“RealPage is proud of the role our customers play in providing safe and affordable housing to millions of people,” RealPage CEO Dana Jones said in a statement posted to the company’s website. “Despite the noise, we will continue to innovate with confidence and make sure our solutions continue to benefit residents and housing providers, alike.”
The lawsuit comes amid heightened scrutiny of corporate landlords in Colorado. At a Denver event with Federal Trade Commission Chair Lina Khan in July, Weiser said he was expanding his office’s efforts to investigate hidden fees, poor living conditions and other “predatory practices.”
