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

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

The department sued RealPage in August, alleging that the company’s algorithms drew on nonpublic information from competing landlords to recommend rent increases that drove housing costs up across the nation. Now, federal and state prosecutors are accusing six real estate companies of being active participants in the scheme.

“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” DOJ Acting Assistant Attorney General Doha Mekki said in a statement. “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. Collectively, the companies operate more than 1.3 million units in 43 states, the DOJ said.

Cortland Management, which oversees 80,000 rental units, has already agreed to a consent decree that would bar it from using competitors’ sensitive data to power any pricing models and from using third-party pricing algorithms without supervision from a court-appointed monitor.

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

“Geystar’s director further disclosed its practices on accepting YieldStar rates and use of concessions,” according to the lawsuit. “As the conversation continued, the two competitors shared additional highly-sensitive information on occupancy—including in specific markets—demand, and the strategic use of concessions.”

The DOJ also alleges that the landlords participated in “user groups” hosted by RealPage during which they discussed how to modify the algorithms’ pricing methodologies as well as their own rent strategies. The complaint includes a litany of anecdotes from these user group sessions in which landlords allegedly shared nonpublic information with their competitors and RealPage employees allegedly told landlords to “push up new and renewal pricing” and “trust the science” of RealPage’s algorithms.

The DOJ has been joined in the suit by the attorneys general from 10 states.