The US Department of Justice, along with eight states including California, has filed a federal lawsuit against a Texas-based real estate software company for allegedly assisting landlords across the country in raising rents to eliminate market competition and harm consumers.
California Attorney General Rob Bonta stated in a press release on August 23 that RealPage, the company in question, provided a subscription-based tool that allowed landlords to price their multi-unit rental properties. The lawsuit alleges that the company illegally collected and shared pricing and supply information from competing landlords.
In addition to California, attorneys general from Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington have joined the lawsuit.
Bonta mentioned that RealPage suggested rent increases to its subscribing landlords, who were aware that their competitors were receiving the same recommendations. He believes this led to rising rental prices even when there was an abundant supply of housing at the time.
According to Bonta, the company exploited consumer data, stifled competition in the leasing market, and forced tenants to accept inflated rents set by colluding landlords.
In the press release, it was noted that Southern California cities, including Anaheim, Santa Ana, Irvine, Riverside, San Bernardino, Ontario, Rancho Cucamonga, Temecula, Murrieta, San Diego, and Carlsbad, were most severely affected by this practice.
By sharing sensitive information like rental unit prices and supply, RealPage enabled landlords to avoid lowering rents to attract tenants. The lawsuit points out that competition among landlords typically leads to rent decreases, but RealPage’s sharing of sensitive data allowed landlords to coordinate prices, eliminating such competition.
Bonta stated, “This conduct is unacceptable and illegal, especially amidst the housing scarcity and affordability crisis California is currently facing, this action has inflicted real harm.”
In California, housing demand has exceeded construction for nearly half a century, resulting in continually rising housing costs and putting nearly 700,000 California residents at risk of eviction.
US Attorney General Merrick Garland mentioned that the company not only recommended rent prices through its software but also regulated landlords who did not adhere to its guidance.
The lawsuit has been filed in the US District Court for the Middle District of North Carolina aiming to prohibit RealPage from collecting sensitive data from its landlord customers, breaking its monopoly on data collection software, and ceasing any form of coordinated rent increases.
RealPage did not respond to requests for comments at the time of reporting. However, in a six-page statement released on its website in June, the company claimed that the allegations were based on “blatantly incorrect information” and argued that its software was beneficial to property suppliers and residents, providing price recommendations – whether to raise, lower, or maintain rents – to achieve specific property goals.
The company stated, “The facts demonstrate that these distorted claims and lawsuits are completely unfounded.”