Department of Justice Settles Lawsuit Against RealPage
The Department of Justice has reached a settlement with RealPage, a tech company focused on real estate, following significant accusations that it created an algorithm that enabled landlords to collude and increase rents unlawfully, according to recent reports.
The settlement was disclosed in a federal court in North Carolina on Monday. It mandates that RealPage discontinue the use of “nonpublic and competitively sensitive information” given by landlords for determining rental prices. Instead, the company must rely on lease data that is at least a year old to train its algorithms.
The Justice Department expressed that this agreement “will help restore free market competition for millions of renters across the United States.”
“It’s crucial that competitors make their own pricing choices,” noted Gail Slater, who leads the Justice Department’s antitrust division. She added that the rise of algorithms calls for robust antitrust monitoring.
Before the settlement can be finalized, it must receive court approval.
This development aligns with a broader initiative by the Trump administration aimed at reducing housing expenses that burden many American families. The settlement provides a solution while avoiding a drawn-out trial.
Last year, under former Attorney General Merrick Garland, the Justice Department had initiated a lawsuit alleging that RealPage’s software allowed unscrupulous landlords to prioritize profits over occupancy, contributing to a housing shortage and increasing costs for renters.
Instead of genuinely competing to attract tenants, landlords began using the algorithm to set prices based on confidential rental information provided to RealPage by themselves and other landlords.
The settlement stipulates that RealPage must also refrain from evaluating geographic market impacts below the state level. Additionally, the company will be required to eliminate or revamp functionalities that curtail rental price decreases or enable price matching with other landlords.
Based in Richardson, Texas, RealPage plans to cease its efforts to collect sensitive rental market data through market research and discussions on private market trends at industry conferences. The company will also accept monitors appointed by the court to ensure compliance.
The Justice Department initially filed the lawsuit in collaboration with eight states: California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington. They accused RealPage of holding an unlawful monopoly over property management software for multifamily residences.
In January, the lawsuit was expanded to include six of the largest property owners in the U.S. as co-defendants: Greystar Real Estate Partners, Livecor (owned by Blackstone), Camden Property Trust, Cushman & Wakefield, Willow Bridge, and Cortland. Illinois and Massachusetts have also joined as plaintiffs.
While the Justice Department has previously reached settlements with Cortland and Greystar, cases against the other defendants are still ongoing.
In return for the settlement, RealPage has agreed to assist the Justice Department with ongoing litigation against the remaining landlords involved.
This case marks the first time that Justice Department officials have targeted algorithmic collusion, a growing concern in various sectors that increasingly depend on software for operations.
“RealPage built its business by undermining natural competitive forces,” states the complaint.
The complaint further references remarks from RealPage executives who allegedly recognized the software’s impact on fair competition in the rental market. One executive noted that sometimes, “it’s better for everyone to succeed than to compete in a manner that suppresses the entire industry.”
