Colorado and seven other states filed a lawsuit with the U.S. Department of Justice on Friday accusing property management company RealPage of working with landlords to drive up rents as part of a large-scale price-fixing scheme.
The lawsuit, filed in federal court, alleges that RealPage, a suburban Dallas-based technology company, controls up to 80 percent of the national market for commercial landlord management software, giving it excessive power to “undermine competition” and distort the multifamily housing market to the advantage of landlords – and to the detriment of renters as housing costs reach record highs and become unaffordable.
“RealPage does this openly and directly – and America’s renters are paying the price,” the lawsuit states.
ProPublica was the first newspaper to report on the company’s practices in a 2022 investigation that found that RealPage’s algorithm collected rental data from competitors and then used that data to recommend rent increases to its clients.
The lawsuit, which was joined by Colorado Attorney General Phil Weiser, quotes a landlord who describes the company’s product as “classic price fixing” – the practice of market competitors colluding to charge customers higher prices rather than competing for business.
“Tenants should benefit from healthy competition among landlords to find an apartment that fits their budget and needs,” Weiser said in a statement. “But RealPage’s software and market dominance have enabled landlords to secure agreed-upon rents, dictate the number of apartments available on the market, and harm tenants by forcing them to pay rents above competitive levels. This anti-competitive behavior leads to rent increases.”
Progressive Democrats had attempted to ban the use of rent-setting algorithms like RealPage in the Colorado state legislature this year, but the proposal, House Bill 1057, was rejected in the state Senate and ultimately killed.
RealPage touts its software’s ability to drive up prices and keep them high – even when market conditions would normally cause landlords to reduce rent.
The company’s rent recommendations “help curb (landlords’) instinct to respond to declining market conditions by either dramatically lowering prices or holding them when turnover and/or occupancy rates are declining,” the company said, according to the lawsuit. “Our tool ensures (landlords) take every possible opportunity to raise prices even in the most declining or unexpected conditions.”
At one point, a RealPage executive described the system in explicitly anti-competitive terms, the suit says. “It’s better for everyone to succeed than for us to try to essentially compete with each other in a way that puts the entire industry in distress,” the executive said. “If enough landlords used RealPage’s software, they would ‘probably act together, not against each other.'”
On its website, RealPage has denied the allegations, which have previously been made in other lawsuits across the country.
“RealPage is proud of the role our customers play in providing safe, affordable housing for millions of people,” RealPage CEO Dana Jones said in a statement on the company’s website. “Despite the noise, we will continue to innovate with confidence and ensure our solutions continue to benefit both residents and housing providers.”
The lawsuit comes amid increased scrutiny of corporate landlords in Colorado. At an event in Denver with Federal Trade Commission Chair Lina Khan in July, Weiser said he would expand his office’s efforts to investigate hidden fees, poor living conditions and other “predatory practices.”
This is a developing story that may be updated.
