US Justice Department accuses RealPage of raising rents Reuters

By Jody Godoy

NEW YORK (Reuters) – The U.S. Justice Department and eight states sued RealPage on Friday, accusing the property management software company of using algorithms to help landlords illegally collude and raise apartment rents.

The lawsuit filed in North Carolina accuses RealPage, headquartered in Dallas, Texas, of letting landlords collude by sharing pricing information with the company’s software, which then recommends rental prices. The software prevents landlords from lowering rent and offering deals to attract tenants, the Justice Department said.

High housing costs are a key concern for American consumers ahead of November’s presidential election, with home prices rising about 50% nationally and rents rising about 35% over the past five years, according to real estate services company Zillow (NASDAQ:) .

The case is the first time the Justice Department has prosecuted algorithmic collusion, a growing concern for antitrust agencies as technology companies offer pricing services based on big data.

“Americans shouldn’t have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Attorney General Merrick Garland said in a statement.

The Justice Department points to statements by RealPage executives that it says show they realized they were helping to dampen competition in the rental market.

“There’s a greater good in everyone succeeding versus trying to compete with each other in a way that actually keeps the entire industry down,” one executive said, according to the Justice Department.

The Justice Department also accuses RealPage of illegally monopolizing the property management software market for multifamily housing in the US.

The attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington joined the Justice Department in the case.

The lawsuit follows similar cases in which the Washington DC attorney general and tenants say RealPage illegally raised rents.