UPDATE: The U.S. Department of Justice (DOJ) has just announced a significant settlement with real estate tech firm RealPage, addressing explosive allegations of enabling landlords to unlawfully collude on rent prices. The settlement was disclosed in a North Carolina federal court on Monday, October 23, 2023, and is poised to reshape rental markets for millions of Americans.
This urgent resolution comes amid increasing pressure on housing costs, which have severely impacted tenants nationwide. The DOJ’s settlement requires RealPage to halt the use of “nonpublic, competitively sensitive information” provided by landlords in its software, which has reportedly contributed to artificially inflated rents.
According to the DOJ, RealPage will no longer utilize active lease data for algorithm training; instead, it must rely solely on data that is at least 12 months old. This move aims to restore fair market competition, ensuring that landlords make independent pricing decisions rather than relying on collusion through algorithmic manipulation.
“Competing companies must make independent pricing decisions,” stated Gail Slater, the DOJ’s antitrust chief. “With the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement.” The settlement awaits court approval before implementation.
The DOJ’s case, initially filed under former US Attorney General Merrick Garland, accused RealPage of facilitating a system that allowed landlords to prioritize profits over filling properties, exacerbating the housing crisis for countless cash-strapped renters. Instead of competing for tenants, landlords allegedly allowed algorithms to set prices based on confidential data submitted to RealPage.
Under the terms of the settlement, RealPage must also eliminate or redesign any features that previously restricted rent price decreases and must stop soliciting sensitive market information through surveys. Additionally, the company will accept a court-appointed monitor to ensure compliance with these new guidelines.
The lawsuit, which initially involved eight states—including California, Colorado, and North Carolina—has since expanded, with Illinois and Massachusetts joining as plaintiffs. In January, six of the nation’s largest landlords, including Greystar Real Estate Partners and Blackstone’s LivCor, were added as co-defendants.
As part of the settlement, RealPage is expected to cooperate with the DOJ in ongoing litigation against these remaining defendants. This landmark case marks the first time the DOJ has targeted algorithmic collusion, highlighting a growing concern as industries increasingly rely on technology.
The implications of this settlement are profound, potentially alleviating the financial burdens that have weighed heavily on American families. The DOJ aims to foster a competitive environment where landlords are incentivized to attract tenants rather than collaborating to inflate prices.
The urgency of this settlement cannot be overstated, as it represents a critical step toward transparency and fairness in the rental market. With housing affordability remaining a pressing issue, this development could signal a turning point for renters across the country.
As the situation continues to evolve, further updates will be crucial for understanding how these changes impact both landlords and tenants. Stay tuned for more breaking news on this developing story.