The US has sued a leading software company that collects and sells rental data, accusing it of subverting competition between landlords and feeding the country’s housing crisis.
The Department of Justice (DOJ) has claimed RealPage’s software algorithm meant rival landlords were sharing what would otherwise be private information, allegedly allowing them to illegally co-ordinate and raise rents.
“Everybody knows the rent is too damn high and we allege this is one of the reasons why,” Attorney General Merrick Garland said at a press conference announcing the lawsuit.
RealPage did not immediately comment but it has previously called similar claims false and misleading.
The Texas-based company, which is owned by private equity firm Thoma Bravo, has found itself in the spotlight in recent years, after an investigation from ProPublica drew attention to its practices.
The company has already been the target of lawsuits filed by renters and prosecutors in Arizona and the District of Columbia earlier this year.
With housing affordability a hot-button issue in the US, criticism of rent-setting algorithms has also become a staple of speeches from Vice President Kamala Harris during her presidential campaign.
In the complaint, the DOJ and eight states claim RealPage had access to information about millions of apartments across the country.
“RealPage allows landlords to manipulate, distort, and subvert market forces,” the DOJ alleged in the complaint.
It took aim at a RealPage offering that recommends rents to its property owner customers, suggesting that many agree to “auto accept” the proposals from RealPage.
It claimed the firm dominated the market for commercial revenue management software, citing the firm’s own estimates that it controlled about 80% of the market.
RealPage in June said it served a much smaller fraction of the rental market than has been claimed and that landlords, not RealPage, set prices.
The lawsuit marks a first for the federal government as it seeks to address the rising use of pricing algorithms across the economy.
Officials said they were also looking at such practices in the meat industry and elsewhere.
“Modern-day wrongdoers cannot hid behind software algorithms and artificial intelligence to violate the law,” said assistant attorney general Jonathan Kanter, who leads up the department’s anti-monopoly unit.