A New Lawsuit Claims Apartment Prices Are Being Rigged With This Software
If you think your rent is too high, this might be a big part of the reason.
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Subscribe for free to get more stories like this directly to your inboxCollusion is a big no-no when it comes to setting artificially high prices for consumers. But that’s exactly what complainants are accusing a company called RealPage (as well as many apartment complexes that use its software) of doing.
Digging into the lawsuit
The U.S. Justice Department filed a civil suit against the Texas-based company over the capabilities of its algorithm, claiming that it is being used to coordinate prices among properties at the expense of increasingly cash-strapped renters.
Here’s how it reportedly works in a nutshell: RealPage’s proprietary algorithm keeps tabs on all of the lease details provided by its clients and shares that information in the form of suggested rental prices, thus allowing apartment complexes far and wide to coordinate their rates.
And with a whopping 80% stake in the software market within the apartment rental segment, that means roughly 3 million rental units across the U.S. could be involved in this alleged scheme.
Deputy Attorney General Lisa Monaco asserted that “RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices.”
RealPage defends itself
For its part, the company claims that it hasn’t done anything wrong. In a statement on its website, RealPage insists that the allegations against its use of the controversial algorithm “are based on demonstrably false information” and that its software “benefits both housing providers and residents.”
That’s not what the Justice Department and eight state attorneys general say in their lawsuit, however. In fact, Attorney General Merrick Garland alleged that the conspiracy goes even further than RealPage simply offering suggested rental rates.
“A large number of landlords effectively agree to outsource their pricing decisions to RealPage by using an ‘auto-accept’ setting that effectively permits RealPage to determine the price a renter will pay,” he said.
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