Restrictions on Rent Algorithms in Legal Agreement

Landlords have been barred from using rent-pricing algorithms to discreetly monitor competitors and inflate rent rates with shared confidential data. This comes as an agreement between RealPage Inc. and federal prosecutors.

The U.S. Department of Justice declared this agreement after a year-long legal battle against RealPage, a software company based in Texas. Although RealPage does not need to make any financial reparations or acknowledge any violation, the settlement awaits judicial approval.

RealPage's algorithm offers landlords across the nation daily pricing recommendations for their units. These recommendations are optional but have been criticized for leveraging a vast array of private data, enabling clients to maximize rent prices.

Gail Slater, the DOJ's antitrust leader, stated the settlement circumvents an expensive and lengthy court case, noting, "RealPage transformed competition into collaboration, burdening renters."

Under the proposed deal, RealPage is restricted from employing real-time data for pricing advice. The nonpublic data utilized must be at least a year old before being incorporated into their algorithms.

"What implications does this have for residents?" Slater publicized in a recorded message, "It leads to genuine competition in the residential market, with prices determined by open market dynamics, not concealed algorithms."

Stephen Weissman, legal representative for RealPage, expressed contentment with the DOJ's cooperation in reaching a solution.

Weissman commented, "Numerous misconceptions exist regarding RealPage’s operational methods and the benefits it offers to property owners and tenants. Our historical application of compiled and anonymized nonpublic data has reportedly reduced vacancy rates and contributed positively to market competitiveness."

Recently, numerous property management firms have settled over their involvement with RealPage, including Greystar, the largest landlord in the country, which resolved a class action for $50 million alongside a $7 million settlement with nine states.

Legislators in states such as California and New York recently enacted laws targeting rent-setting software, and a growing number of cities including Philadelphia and Seattle, have similarly legislated against this practice.

A total of ten states—California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee, and Washington—participated in the DOJ’s lawsuit. However, these states did not partake in the recent settlement.