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The U.S. Division of Justice on Friday sued a serious actual property agency, alleging the corporate’s algorithmic software program allows landlords throughout the nation to set lease at artificially excessive charges.
The lawsuit, joined by a number of states together with California, focuses on software program from Texas-based firm RealPage. The software program is utilized by many landlords to set lease costs for each vacant items and renewal charges for current tenants.
In a really aggressive market, authorities stated, property homeowners could be pressured to compete with one another, serving to to drive down rental prices for People.
Nevertheless, in response to the lawsuit, RealPage enabled the alternative.
When changing into a shopper, supposedly competing landlords share nonpublic data — comparable to occupancy and rents on executed leases — with RealPage, which then makes use of that knowledge to suggest rents at particular person properties.
“As People wrestle to afford housing, RealPage is making it simpler for landlords to coordinate to extend rents,” Assistant Atty. Normal Jonathan Kanter stated in a press release.
RealPage didn’t instantly return a request for remark.
The corporate beforehand referred to as related allegations false and deceptive, saying shoppers can decline its suggestions, which at instances embody dropping lease.
However in its grievance, the Justice Division pointed to situations the place RealPage described its software program as a software for maximizing lease and outperforming the market. Authorities additionally alleged the corporate made it tougher for landlords to reject its suggestions than settle for them.
“There may be higher good in all people succeeding versus basically attempting to compete towards each other in a manner that really retains the whole business down,” a RealPage govt stated, in response to the lawsuit.
At one other level, RealPage described its instruments as making certain landlords are “driving each attainable alternative to extend value even in probably the most downward trending or surprising circumstances,” the grievance says.
Antitrust enforcement has been a spotlight of the Biden administration. The Justice Division has sued main corporations comparable to Google and Apple, alleged they engaged in anticompetitive conduct.
Vice President Kamala Harris has additionally criticized using rent-setting algorithms whereas operating for president.
In a press release, Atty. Gen. Merrick B. Garland stated the Justice Division would proceed to aggressively implement antitrust legal guidelines.
“People mustn’t need to pay extra in lease as a result of an organization has discovered a brand new approach to scheme with landlords to interrupt the regulation,” Garland stated.
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