The U.S. Division of Justice (DOJ) sued RealPage on Friday after a two-year investigation that included an unannounced FBI raid of a nationwide company landlord. The DOJ alleged that Richardson, Texas-based RealPage, which sells actual property software program, decreased competitors amongst landlords and artificially inflated rents for hundreds of thousands of tenants throughout the nation.
“We allege that RealPage’s pricing algorithm permits landlords to share confidential, competitively delicate info and align their rents,” legal professional common Merrick B. Garland acknowledged in a press launch.
The DOJ filed the 115-page grievance within the U.S. District Court docket for the Center District of North Carolina on Friday. The antitrust lawsuit particulars how RealPage signed contracts with landlords who would in any other case be opponents and picked up delicate, detailed details about lease costs, lease phrases, facilities and occupancy charges.
RealPage then allegedly fed the data to its AI-driven algorithm, which gave landlords suggestions on easy methods to value leases and set phrases for rental agreements. The DOJ additionally accused the corporate of guaranteeing landlords accepted its suggestions by sending out pricing advisors to fulfill with them for “accountability conversations” and including an “auto settle for” characteristic so landlords would mechanically approve value will increase.
In 2020, RealPage stated its software program collected knowledge on 16 million rental items of the 22 million investment-grade house items within the U.S., indicating its broad attain.
U.S. Lawyer Common Merrick Garland (C), U.S. Deputy Lawyer Common Lisa Monaco (L) and U.S. Appearing Affiliate Lawyer Common Benjamin Mizer (R). Picture Credit score: Anna Moneymaker/Getty Pictures
“As Individuals wrestle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” assistant legal professional common Jonathan Kanter of the Justice Division’s Antitrust Division acknowledged, including that “competitors – not RealPage – ought to decide what Individuals pay to lease their houses.”
The DOJ filed the lawsuit with the attorneys common of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. State attorneys common for Arizona and Washington, D.C., have already taken authorized motion in opposition to RealPage this 12 months.
In a assertion, RealPage stated the DOJ’s claims had been “devoid of benefit” and “will do nothing to make housing extra inexpensive.” The lawsuit “seeks to scapegoat pro-competitive know-how,” the corporate claimed.
The non-partisan nonprofit American Financial Liberties Undertaking (AELP) took a unique stance. In an emailed assertion to Entrepreneur, AELP senior authorized counsel Lee Hepner pointed to RealPage’s personal advertising, highlighted by the DOJ, which acknowledged that the corporate took “each attainable alternative” to lift costs.
“Working individuals have sufficient issues affording every day requirements with out RealPage bragging that it seizes ‘each attainable alternative’ to extend rents,” Hepner acknowledged.
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