DOJ Sues RealPage for Alleged Rent-Fixing Scheme Using AI Software

The U.S. Department of Justice (DOJ) filed an antitrust lawsuit against RealPage, a Texas-based property management software provider, on Friday. The lawsuit accuses RealPage of facilitating collusion among landlords to artificially inflate rent prices, potentially affecting millions of renters across the country.

According to the complaint, RealPage and its competitors engaged in a price-fixing scheme by sharing nonpublic, sensitive information. This data was then used by RealPage’s algorithmic pricing software to generate rent recommendations, effectively replacing competition with coordinated rent setting to the detriment of renters nationwide. The DOJ claims that this practice allowed RealPage to monopolize the rental market through its revenue management software, which landlords allegedly relied on to determine rent costs.

“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” said Attorney General Merrick B. Garland in a statement on Friday. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. Using software as the sharing mechanism does not immunize this scheme from Sherman Act liability, and the Justice Department will continue to aggressively enforce the antitrust laws and protect the American people from those who violate them.”

Read more: RealPage Antitrust Suit Could Be Legal Test For AI-Driven Collusion

Deputy Attorney General Lisa Monaco highlighted the modern implications of this century-old law, noting that RealPage’s use of an AI-powered algorithm to coordinate rent prices undermines competition and fairness for consumers. “Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all our legal tools to ensure accountability for technology-fueled anticompetitive conduct,” Monaco said.

RealPage has denied the allegations, asserting that its customers have full control over their rent prices and can reject the algorithm’s recommendations. “RealPage’s revenue management software is purposely built to be legally compliant, and we have a history of working constructively with the DOJ to show that,” a spokesperson for the company stated, per CBS News.

The lawsuit comes at a time when Americans are grappling with rising costs for necessities, including housing, which has been a significant factor in persistent inflation. Assistant Attorney General Jonathan Kanter of the DOJ’s Antitrust Division emphasized the impact of RealPage’s practices on housing affordability. “As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” Kanter said. “Today, we filed an antitrust suit against RealPage to make housing more affordable for millions of people across the country. Competition – not RealPage – should determine what Americans pay to rent their homes.”

The DOJ’s lawsuit also pointed to RealPage’s own acknowledgment that its software is designed to maximize profits for landlords, citing a description of the product as “driving every possible opportunity to increase price.” Additionally, a landlord using RealPage’s software reportedly praised the tool, noting that it leverages proprietary data from other users to suggest rent prices and terms—a practice that the DOJ characterizes as “classic price fixing.”

Source: CBS News