U.S. DOJ and Eight States Sue RealPage: How Algorithmic Collusion is Inflating Your Rent
By Jody Godoy
NEW YORK (Multibagger) - In a landmark case, the U.S. Department of Justice (DOJ) and eight states have filed a lawsuit against RealPage, accusing the property management software giant of using sophisticated algorithms to help landlords unlawfully collude and inflate apartment rents.
The lawsuit, initiated in North Carolina, claims that RealPage, headquartered in Dallas, Texas, enabled landlords to share pricing information through its software. This data exchange allowed the software to recommend rent prices, effectively preventing landlords from reducing rents or offering competitive deals to attract tenants, as per the DOJ.
Soaring Housing Costs: A National Concern
High housing costs are a pressing issue for U.S. consumers, especially with the presidential election around the corner. Over the past five years, home prices have surged by approximately 50%, while rents have increased by around 35%, according to real estate service firm Zillow.
Pioneering Case Against Algorithmic Collusion
This case marks the first instance where the DOJ has targeted algorithmic collusion, reflecting a growing concern among antitrust regulators about technology companies offering pricing services based on big data.
"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," stated Attorney General Merrick Garland.
The DOJ highlights admissions from RealPage executives, indicating their awareness of their role in suppressing competition within the rental housing market. One executive reportedly stated, "There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down."
Monopolizing Property Management Software
Additionally, the DOJ accuses RealPage of monopolizing the market for property management software for multi-family dwellings in the U.S.
The states of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington have joined the DOJ in this legal battle. This lawsuit follows similar cases where the attorney general for Washington D.C. and renters have accused RealPage of unlawfully inflating rents.
Breaking It Down: How This Affects You
What is Algorithmic Collusion?
Algorithmic collusion involves companies using algorithms and big data to coordinate actions like pricing, leading to anti-competitive practices. In this case, RealPage allegedly allowed landlords to share rent data, resulting in inflated rent prices.
Why Should You Care?
If you're a renter or potential homeowner, this lawsuit directly impacts you. Inflated rents mean higher monthly expenses, making it harder for you to save money or invest in other areas. Understanding that some rent increases might be artificially driven by such technology can help you make more informed decisions about your housing options.
The Bigger Picture
This case signals a critical step by regulators to monitor and curb anti-competitive practices facilitated by advanced technology. It highlights the importance of legal frameworks keeping pace with technological advancements to protect consumers and ensure fair market conditions.
Actionable Takeaways
- Stay Informed: Keep an eye on the progress of this lawsuit. Regulatory actions can lead to changes that might benefit renters, such as more competitive pricing.
- Understand Your Lease: Before signing a lease, understand the terms and conditions. Knowing your rights can help you negotiate better deals.
- Explore Alternatives: Consider various housing options and compare prices to ensure you're getting a fair deal.
By understanding the implications of this lawsuit, you can better navigate the complexities of the rental market and safeguard your financial well-being.