DOJ Adds 6 Major Landlords to Lawsuit for Algorithmically Inflating Americans’ Rents

The Justice Department has expanded its case against real estate software company RealPage to include six of the nation’s largest landlords.

The department sued RealPage in August, alleging the company’s algorithms used non-public information from competing landlords to recommend rent increases that drove up housing costs across the country. Now federal and state prosecutors are accusative six real estate companies are active participants in the scheme.

“As Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rent prices and used coordinating algorithms to keep rent high,” said Acting Assistant Atty. DOJ prosecutor Doha Mecca. “Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country.”

The companies added to the suit are Greystar Real Estate Partners LLC Blackstone’s LivCor LLC; Camden Property Trust; Willow Bridge Property Company; Cortland Management LLC; and Cushman & Wakefield Inc. and Pinnacle Property Management Services LLC, which are jointly owned. Overall, the companies operate more than 1.3 million units in 43 states, the DOJ said.

Cortland Management, which controls 80,000 rental units, has already agreed to a consent decree that would bar it from using sensitive competitor data to power any pricing models and using unsupervised third-party pricing algorithms by a court-appointed monitor.

The amended complaint against RealPage and the landlords allege that the property owners directly shared information with each other about their pricing plans and settings within RealPage’s YieldStar software. For example, in September 2020, Camden’s director of revenue management reportedly spoke with Greystar’s director of revenue management to discuss how they plan to approach pricing next quarter.

“The Geystar director further disclosed his practices of accepting YieldStar rates and using rebates,” according to the suit. “As the conversation continued, the two competitors shared additional highly sensitive information regarding employment demand, including in specific markets, and the strategic use of concessions.”

The DOJ also alleged that the landlords participated in “user groups” hosted by RealPage, during which they discussed how to change the algorithms’ pricing methodologies as well as their own rental strategies. The complaint includes a litany of anecdotes from those user group sessions in which landlords allegedly shared non-public information with their competitors and RealPage employees told landlords to “increase new and renewal prices” and “trust the science” of RealPage algorithms.

The DOJ was joined in the case by attorneys general from 10 states.