Last week, Colorado Attorney General Phil Weiser joined the Justice Department and a bipartisan coalition of states in filing a lawsuit against RealPage, Inc., a Texas-based revenue management software company, for allegedly harming competition and renters by using illegal agreements with landlords to carry out a price-fixing scheme that has cost Coloradans millions of dollars in rent payments.
“Half of renters in Colorado spend more than 30% of their income on housing costs. Renters should benefit from healthy competition between landlords to find an apartment that fits their budget and needs. But RealPage’s software and market dominance have enabled collusion between landlords to fix rents, set the number of apartment available in the market, and harm renters by forcing them to pay rents above competitive levels. This anti-competitive conduct is driving rent increases. That’s why we filed this lawsuit to hold RealPage accountable and to fight for renters,” said Weiser.
According to the lawsuit, RealPage enables collusion between landlords and distorts the housing market for millions of Americans who rent. The company does this with software it sells to landlords who agree to share competitively sensitive data, such as rents from executed leases, lease terms, and projected future vacancies. The software combines this massive amount of nonpublic, competitive data collected from competing landlords and feeds it to an algorithm to provide daily, near real-time pricing recommendations back to landlords.
RealPage uses mechanisms to make it easy for landlords to accept the price recommendations and difficult to decline them. RealPage also often succeeds in getting landlords to end concessions, like one-month free rent or rent discounts, that are used to attract or keep renters. Additionally, the software tracks the supply of available apartments, and landlords in markets with heavy demand can use this information to keep properties off the market and drive up rents.
As a result, a large percentage of landlords license the software and choose to share their information with RealPage to “eliminate the guessing game” of what their competitors are doing in the market and to maximize rents at the expense of renters. At the same time, RealPage has been able to attract more landlords and accumulate a massive reservoir of competitively sensitive data to control about 80% of the market for commercial revenue management software for landlords. As a result of its conduct, RealPage has undermined the ability of rival revenue management software providers to compete in the market.
The lawsuit is filed in U.S. District Court for the Middle District of North Carolina. The lawsuit asks the court to end the anticompetitive agreements among RealPage and its landlord customers to share confidential, competitively sensitive information and engage in a pricing alignment scheme in order to raise rents on the American public. It also seeks to end RealPage’s illegal monopoly in revenue management software built on the competitors’ data that it collects and uses.
“I have repeatedly heard from Coloradans that high rents and the cost of housing is a top concern. Landlords need to operate fairly, which means not using abusive practices like deceptive or non-disclosed ‘junk fees’ and not using RealPage’s software to collude with rivals,” said Weiser. “We will continue to stand up for consumers and hold accountable those who take advantage of them.”
Also joining the lawsuit are the attorneys general from California, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington.