The U.S. Division of Justice (DOJ) sued RealPage on Friday after a two-year investigation that included an unannounced FBI raid of a nationwide company landlord. The DOJ alleged that Richardson, Texas-based RealPage, which sells actual property software program, decreased competitors amongst landlords and artificially inflated rents for hundreds of thousands of tenants throughout the nation.
“We allege that RealPage’s pricing algorithm permits landlords to share confidential, competitively delicate data and align their rents,” legal professional common Merrick B. Garland acknowledged in a press launch.
The DOJ filed the 115-page grievance within the U.S. District Court docket for the Center District of North Carolina on Friday. The antitrust lawsuit particulars how RealPage signed contracts with landlords who would in any other case be opponents and picked up delicate, detailed details about lease costs, lease phrases, facilities and occupancy charges.
RealPage then allegedly fed the knowledge to its AI-driven algorithm, which gave landlords suggestions on the best way to value leases and set phrases for rental agreements. The DOJ additionally accused the corporate of guaranteeing landlords accepted its suggestions by sending out pricing advisors to fulfill with them for “accountability conversations” and including an “auto settle for” characteristic so landlords would routinely approve value will increase.
In 2020, RealPage mentioned its software program collected knowledge on 16 million rental models of the 22 million investment-grade condominium models within the U.S., indicating its broad attain.
U.S. Lawyer Normal Merrick Garland (C), U.S. Deputy Lawyer Normal Lisa Monaco (L) and U.S. Performing Affiliate Lawyer Normal Benjamin Mizer (R). Picture Credit score: Anna Moneymaker/Getty Photographs
“As Individuals battle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” assistant legal professional common Jonathan Kanter of the Justice Division’s Antitrust Division acknowledged, including that “competitors – not RealPage – ought to decide what Individuals pay to lease their houses.”
The DOJ filed the lawsuit with the attorneys common of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. State attorneys common for Arizona and Washington, D.C., have already taken authorized motion towards RealPage this yr.
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In a press release, RealPage mentioned the DOJ’s claims have been “devoid of advantage” and “will do nothing to make housing extra reasonably priced.” The lawsuit “seeks to scapegoat pro-competitive know-how,” the corporate claimed.
The non-partisan nonprofit American Financial Liberties Challenge (AELP) took a unique stance. In an emailed assertion to Entrepreneur, AELP senior authorized counsel Lee Hepner pointed to RealPage’s personal advertising and marketing, highlighted by the DOJ, which acknowledged that the corporate took “each attainable alternative” to boost costs.
“Working folks have sufficient issues affording every day requirements with out RealPage bragging that it seizes ‘each attainable alternative’ to extend rents,” Hepner acknowledged.
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