U.S. Justice Department accuses RealPage of driving up rents

By Jody Godoy

NEW YORK (Reuters) – The U.S. Department of Justice and eight states sued RealPage on Friday, accusing the property management software company of using algorithms to help landlords illegally collude and drive up rents for apartments.

The lawsuit filed in North Carolina accuses Dallas, Texas-headquartered RealPage of letting landlords collude by sharing their pricing information with the company’s software, which then recommends rent prices. The software keeps landlords from lowering rent and offering deals to attract renters, the Justice Department said.

High housing costs are a key concern for U.S. consumers ahead of the November presidential election, with home prices rising nationally by about 50% and rent going up around 35% in the last five years, according to real estate service firm Zillow (NASDAQ:).

The case is the first time the Justice Department has gone after algorithmic collusion, a growing concern for antitrust enforcers as technology companies offer pricing services based on big data.

“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Attorney General Merrick Garland said in a statement.

The Justice Department points to statements by RealPage executives that it says show they realized they were helping to dampen competition in the rental housing market.

“There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down,” one executive said, according to the Justice Department.

The Justice Department also accuses RealPage of illegally monopolizing the market for property management software for multi-family dwellings in the U.S.

The attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington joined the Justice Department in the case.

The lawsuit follows similar cases where the attorney general for Washington D.C. and renters say RealPage illegally drove up rents.