US Justice Dept reportedly checking AI rent-pricing biz RealPage

Company accused of allowing landlords to collude and artificially inflate rental prices

AI rent-pricing software biz, RealPage, is reportedly being investigated by the US Department of Justice's Antitrust Division over claims its algorithms allow landlords to collude with another to inflate prices.

The investigation comes after senators urged prosecutors from the Federal Trade Commission and the DoJ to launch a probe into RealPage's technology. A letter addressed to Jonathan Kanter, the Assistant Attorney General for the Antitrust Division, signed by Amy Klobuchar (D-MN), Richard Durbin (D-IL), and Cory Booker (D-NJ), said the company raises "significant anticompetitive concerns."

"We write to ask that the Antitrust Division investigate recent allegations of anticompetitive collusion leading to significant increases in rents for apartments," the letter said. "As recently reported, software offered by RealPage uses pricing algorithms to adjust prices on vacant apartments in real time…The program may also induce landlords to charge the rents recommended by the algorithm, putting upward pressure on prices and decreasing the availability of affordable apartments."

RealPage's software, YieldStar, ingests different types of data and suggests how much a home should be priced to renters. The size, location, and the rental prices of nearby units provided by landlords are taken into consideration. Real estate companies and property managers can decide whether to accept the software's suggestions or not. 

A lawsuit filed by five renters accused RealPage of enabling property owners to collude and act like a "cartel" to drive up prices. The software allegedly advised landlords to keep a certain number of units vacant to increase housing demand, allowing them to charge more. 

Now, the DoJ has opened up an investigation into RealPage's software, according to ProPublica. If its algorithms enable landlords to secretly work together to artificially inflate rental prices, the company is at risk of violating federal antitrust and anticompetition laws.

In 2017, the DoJ asked the company for more information when it announced plans to acquire Rainmaker Group's rival rent-pricing software, Lease Rent Options (LRO), for $300 million. The investigation reportedly analyzed the financial impact of the merger on customers and did not consider how the software affected renters. RealPage's acquisition of LRO successfully closed in 2017. 

The Register has asked RealPage and the DoJ for comment.

A spokesperson for the company previously denied the allegations in a statement and told us: "RealPage's revenue management software is purposely built to be legally compliant." ®

 

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