The U.S. Department of Justice (DOJ) filed suit against RealPage on Friday following a two-year investigation that included an unannounced FBI raid on a nationwide corporate landlord. The DOJ alleged that RealPage, a Richardson, Texas-based company that sells real estate software, reduced competition among landlords and artificially inflated rents for millions of tenants across the country.
“We allege that RealPage's pricing algorithm enables landlords to share confidential, competitively sensitive information and adjust their rents,” Attorney General Merrick B. Garland said in a press release.
The Justice Department filed the 115-page lawsuit Friday in the U.S. District Court for the Middle District of North Carolina. The antitrust complaint details how RealPage signed contracts with landlords who would otherwise have been competitors and collected confidential, detailed information about rental prices, lease terms, amenities and occupancy rates.
RealPage then allegedly fed the information into its AI-driven algorithm, which gave landlords recommendations on how to set pricing and lease terms. The Justice Department also accused the company of ensuring landlords accepted its recommendations by sending pricing consultants to “accountability meetings” with them and adding an “auto-accept” feature so landlords would automatically approve price increases.
In 2020, RealPage said its software collected data on 16 million rental units of the 22 million investment-grade apartments in the U.S., indicating its wide reach.
US Attorney General Merrick Garland (center), US Deputy Attorney General Lisa Monaco (left) and US Assistant Attorney General Benjamin Mizer (right). Photo credit: Anna Moneymaker/Getty Images
“As it becomes increasingly difficult for Americans to afford housing, RealPage is making it easier for landlords to increase rents in a coordinated manner,” said Jonathan Kanter, Assistant Attorney General of the Justice Department's Antitrust Division. He added, “Competition – not RealPage – should determine how much Americans pay to rent their homes.”
The Justice Department filed the lawsuit with the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. The attorneys general of Arizona and Washington, DC, have already taken legal action against RealPage this year.
Related: Attorneys General sue RealPage and landlords over ‘astronomical’ rent increases: ‘This was not a fair market’
In a statement, RealPage said the Justice Department's claims were “meritless” and would “do nothing to make housing more affordable.” The lawsuit “attempts to scapegoat pro-competitive technologies,” the company claimed.
The nonpartisan, nonprofit American Economic Liberties Project (AELP) took a different stance. In an emailed statement to Entrepreneur, Lee Hepner, senior legal counsel for the AELP, pointed to RealPage's marketing, which was highlighted by the U.S. Department of Justice, saying the company has taken “every possible opportunity” to raise prices.
“Working people have enough trouble affording everyday necessities without RealPage bragging about taking 'every possible opportunity' to raise rents,” Hepner said.
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