The DOJ Sued an AI Software Company It Says Artificially Inflated Rents for Millions of Americans The lawsuit comes after a two-year investigation that included an unannounced FBI raid.
By Sherin Shibu Edited by Jessica Thomas
Key Takeaways
- On Friday, the U.S. Department of Justice sued RealPage, a real estate software company.
- The DOJ alleged that RealPage fixed rent prices with its AI-powered pricing algorithm.
- In a statement, RealPage said the DOJ's claims were "devoid of merit" and "will do nothing to make housing more affordable."
Our biggest sale — Get unlimited access to Entrepreneur.com at an unbeatable price. Use code SAVE50 at checkout.*
Claim Offer*Offer only available to new subscribers
The U.S. Department of Justice (DOJ) sued RealPage on Friday after a two-year investigation that included an unannounced FBI raid of a national corporate landlord. The DOJ alleged that Richardson, Texas-based RealPage, which sells real estate software, decreased competition among landlords and artificially inflated rents for millions of tenants across the country.
"We allege that RealPage's pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents," attorney general Merrick B. Garland stated in a press release.
The DOJ filed the 115-page complaint in the U.S. District Court for the Middle District of North Carolina on Friday. The antitrust lawsuit details how RealPage signed contracts with landlords who would otherwise be competitors and collected sensitive, detailed information about rent prices, lease terms, amenities and occupancy rates.
RealPage then allegedly fed the information to its AI-driven algorithm, which gave landlords recommendations on how to price rentals and set terms for rental agreements. The DOJ also accused the company of ensuring landlords accepted its recommendations by sending out pricing advisors to meet with them for "accountability conversations" and adding an "auto accept" feature so landlords would automatically approve price increases.
In 2020, RealPage said its software collected data on 16 million rental units of the 22 million investment-grade apartment units in the U.S., indicating its broad reach.
U.S. Attorney General Merrick Garland (C), U.S. Deputy Attorney General Lisa Monaco (L) and U.S. Acting Associate Attorney General Benjamin Mizer (R). Photo Credit: Anna Moneymaker/Getty Images
"As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents," assistant attorney general Jonathan Kanter of the Justice Department's Antitrust Division stated, adding that "competition – not RealPage – should determine what Americans pay to rent their homes."
The DOJ filed the lawsuit with the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. State attorneys general for Arizona and Washington, D.C., have already taken legal action against RealPage this year.
In a statement, RealPage said the DOJ's claims were "devoid of merit" and "will do nothing to make housing more affordable." The lawsuit "seeks to scapegoat pro-competitive technology," the company claimed.
The non-partisan nonprofit American Economic Liberties Project (AELP) took a different stance. In an emailed statement to Entrepreneur, AELP senior legal counsel Lee Hepner pointed to RealPage's own marketing, highlighted by the DOJ, which stated that the company took "every possible opportunity" to raise prices.
"Working people have enough problems affording daily necessities without RealPage bragging that it seizes 'every possible opportunity' to increase rents," Hepner stated.
Related: This Simple Money Formula Helped Me Escape My 9-5 and Find Financial Freedom
