The DOJ adds 6 major landlords to the lawsuit over the algorithmic inflation of US rents

The Justice Department has expanded its lawsuit against 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 relied on non-public information from competing landlords to recommend rent increases that drove up housing costs across the the nation Now, federal and state prosecutors are accusing six real estate companies to be 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 rent prices and used algorithms to coordinate to keep the price of the “high rent,” DOJ Assistant Attorney General Doha Mekki said in a statement. “Today’s action against RealPage and the 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 included. 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 prevent it from using sensitive competitor data to feed any pricing models and from using third-party pricing algorithms without oversight from a designated monitor. the court

U amended claim against RealPage and the owners allege that the property owners directly shared information about their pricing plans and settings in RealPage’s YieldStar software. 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 next quarter.

“The director of Geystar also disclosed his practices for accepting YieldStar’s rates and the use of grants,” according to the lawsuit. “As the conversation continued, the two competitors shared additional highly sensitive information about 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 algorithm’s pricing methodologies and their rental strategies. The complaint includes a litany of anecdotes from these user group sessions in which landlords allegedly shared non-public information with their competitors and RealPage employees allegedly told landlords to “inflate new and renewal prices” and “trusting the science” of RealPage’s algorithms.

The DOJ was joined in the suit by the attorneys general of 10 states.