Jackson sues landlords for using software algorithm to set rental rates

On Tuesday, newly sworn-in Attorney General Jeff Jackson joined a lawsuit alongside the US Department of Justice (DOJ) and nine other states in suing landlords for what they say is raising rent and “frustrating the natural forces of competition” by using software that offers property owners pricing information from other landlords.

Jackson is suing six landlords for allegedly working with the software company RealPage to raise rent. The suit alleges landlords use the software company’s algorithm to set rent prices for approximately one-third of one-bedroom and two-bedroom apartments in North Carolina.

“North Carolinians are struggling to afford their rent as it is – we won’t stand for landlords and real estate companies making the problem worse to line their own pockets,” said Jackson in a press release. “I’m suing these landlords to make sure they play by the rules so North Carolinians can get fair prices for rent.”

The landlords targeted in the suit own or manage more than 70,000 units across the state, especially in heavily populated metro areas such as Raleigh, Durham, Chapel Hill, and Charlotte. The landlords in question are Greystar Real Estate Partners LLC, Blackstone’s LivCor LLC, Camden Property Trust, Cushman & Wakefield Inc., and Pinnacle Property Management Services LLC, Willow Bridge Property Company LLC, and Cortland Management LLC.

“We are disappointed that the DOJ added us and other operators to their lawsuit against RealPage, Greystar has and will conduct its business with the utmost integrity,” according to a press release.  “At no time did Greystar engage in any anti-competitive practices. We will vigorously defend ourselves in this lawsuit.”

RealPage also came out with a statement to defend themselves.

“It’s past time to stop scapegoating RealPage — and now our customers — for housing affordability problems when the root cause of high housing costs is the under-supply of housing,” Jennifer Bowcock, senior VP of communications for RealPage, told AP. Bowcock also told AP that their software is used on less than 10% of rental units, and price reccomendations are used less than half the time.

The lawsuit is part of an ongoing case against RealPage, filed by the DOJ back in August, reports AP. It alleges that RealPage is exploiting landlords’ sensitive information to create a pricing algorithm that violates antitrust laws. The lawsuit alleges landlords communicated with RealPage to share non-public information about rent prices, occupancy, discounts, and strategies for setting rents. Sharing this sensitive, non-public information allowed landlords to use RealPage products to set higher rent prices than would have been set by competitive market forces. 

“Renters are entitled to the benefits of vigorous competition among landlords,” according to the lawsuit. “In prosperous times, that competition should limit rent hikes; in harder times, competition should bring rent down, making housing more affordable.  RealPage has built a business out of frustrating the natural forces of competition…RealPage sells software to landlords that collects nonpublic information from competing landlords and uses that combined information to make pricing recommendations.” 

Jackson joined a lawsuit with the DOJ and the attorney generals of California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, Oregon, Tennessee, and Washington.

The post Jackson sues landlords for using software algorithm to set rental rates first appeared on Carolina Journal.