The US Justice Department has filed a civil lawsuit against RealPage Inc., a Richardson-based real estate company it alleged helped landlords inflate rent prices nationwide.
The DOJ and eight states--specifically California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington--accused RealPage of developing an algorithm that facilitated a price-fixing conspiracy that decreased "competition among landlords" and allow the software to monopolize the market for tools that help landlords price apartments, according to the lawsuit. The software is currently being used in managing three million rental units in the US, most of which are in the Southern states.
The lawsuit noted that RealPage uses non-public data provided by landlords to see what their competitors are charging. This then allows the software to make recommendations that allow its users to maximize the rent they can charge, with the figures allegedly being often higher than they would be in a competitive market.
"Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law," Atty. Gen. Merrick Garland said in a statement. "We allege that RealPage's pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents."
What Is RealPage?
RealPage is software owned by the private equity firm Thoma Bravo that is used by landlords to set prices for apartments. The tool is advertised to help landlords earn between 3% to 7% more than they would otherwise have, per the New York Times.
RealPage has denied previous allegations of illegal collusion and argued that landlords using the software are not obliged to accept and implement its suggestions when setting rental prices. The company also argued that other factors, such as a lack of housing units in the market, are to blame for the increasing prices.
In a post on X (formerly Twitter), Jennifer Bowcock, a spokeswoman for RealPage, said the company plans to "vigorously" defend itself against the suit. Bowcock also said the company's revenue management software was "purposely built to be legally compliant."
The suit is the latest in the government's efforts to regulate what it says were monopolistic behaviors that harm consumers and the misuse of technology.