T
he US Department of Justice has filed a lawsuit against RealPage, a real estate company, alleging they participated in a price-fixing scheme to increase rents. The attorneys general of eight states have joined the lawsuit filed in federal court in North Carolina. The Justice Department claims RealPage's algorithmic pricing allows landlords to collude on multifamily dwellings' rents, which harms millions of Americans and deprives renters of competitive leasing terms.

    According to the complaint, RealPage's pricing software uses confidential, competitively sensitive data like current rents, vacancy rates, and lease expiration dates to suggest daily rental prices. RealPage has pitched this software as a way to maximize landlords' profits and help reduce vacancy rates. However, RealPage has denied any anticompetitive behavior in the past and stated that their software can lower rents when demand drops.

    The lawsuit was brought under the Sherman Antitrust Act, a law passed over a century ago to combat anticompetitive schemes like robber barons shaking hands at secret meetings. The DOJ alleges RealPage has a monopoly, controlling about 80% of the US market share for this type of software. Landlords are encouraged to accept RealPage's pricing recommendations, and if they don't, they must provide an explanation to a regional manager.

    In some markets across the country, half or more of landlords use RealPage's pricing algorithm, according to housing experts. This lawsuit isn't the first to target RealPage's software; there are about 20 other lawsuits nationwide. Some other pricing-software companies worry that the DOJ lawsuit could harm their reputations.

    There's proposed legislation in Congress to limit the use of this kind of artificial intelligence. Meanwhile, Vidur Gupta, CEO of Beekin, a pricing-software company, believes AI is helping not just profit-seeking landlords but also operators and developers of affordable housing.