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Boston Landlords Named as US Sues RealPage Over Alleged Rent-Inflating Practices

By  |  September 5, 2024

The U.S. Department of Justice, along with attorneys general from eight states, filed a lawsuit against RealPage Inc., a prominent AI-enabled property management software provider, accusing the company of engaging in anti-competitive practices. According to Boston.com, the suit alleges that RealPage’s software, used widely by landlords, violates antitrust laws and has reduced competition in rental pricing across the country, impacting millions of Americans. The states involved in the lawsuit include North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington.

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    The Justice Department and state officials argue that RealPage’s software has monopolized the market for commercial revenue management, specifically through its Lease Rent Option feature. This feature, the complaint claims, allows landlords to collect and analyze sensitive rental data, then use it to set higher rental prices across different markets, hurting fair competition and limiting housing options. Per Boston.com, Acting Associate Attorney General Benjamin C. Mizer emphasized in an Aug. 23 news release that RealPage’s conduct allows landlords to “undermine fair pricing” while harming consumers by stifling competition.

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    This is not the first time RealPage’s pricing software has come under scrutiny. According to a report by ProPublica, RealPage’s AIRM software (formerly YieldStar) has been linked to significant rent increases in buildings across the country. Boston.com highlights a specific case from October 2022, in which a Boston tenant, Kaylee Hutchinson, experienced a 6.5% rent hike during the pandemic, a period when rental units in her building were largely vacant.

    Related: RealPage Legal Counsel Refutes DOJ Accusations of Collusion in Rental Market

    The lawsuit follows the consolidation of more than 30 cases against RealPage for alleged antitrust violations, according to Bisnow. RealPage, however, disputes the allegations, posting a detailed six-page defense on its website. The company argues that its software provides housing providers and prospective tenants with more flexibility, while ensuring compliance with Fair Housing laws. RealPage insists that the company does not use personal or demographic data to set rental prices and that landlords retain control over pricing decisions.

    Despite the company’s defense, tenants in Massachusetts have also raised concerns. Some have filed lawsuits against RealPage and its clients. Boston.com notes that Massachusetts-based WinnResidential Manager Corp., which manages 18 apartment properties in the state, is named in one such suit. However, a company spokesperson clarified that WinnCompanies ceased using RealPage’s revenue management software almost a year ago. “WinnCompanies denies the claims and is currently seeking removal from the lawsuit,” the spokesperson said, further pointing out that the majority of the company’s apartments are income-restricted.

    Source: Boston.com