The Justice Department adds 6 major landlords to a lawsuit over algorithmically inflating Americans’ rents

The Justice Department has expanded its lawsuit against real estate software company RealPage to include six of the nation’s largest real estate owners.

The department sued RealPage in August, alleging that the company’s algorithms relied on non-public information from competing landlords to recommend rent increases that drove up housing costs across the country. Now, federal and state prosecutors accused Six real estate companies are active participants in the scheme.

“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep rental prices high,” Acting Assistant Attorney General Doha Makki said in a statement. “Today’s action against RealPage and six major realtors seeks to end their practices of putting profits over people and make housing more affordable for millions of people across the country.”

The companies added to the lawsuit are Greystar Real Estate Partners LLC Blackstone’s LivCor LLC; Camden Property Trust; Willow Bridge Real Estate Company; Cortland Management LLC. and Cushman & Wakefield Inc. and Pinnacle Property Management Services LLC, which are jointly owned. The Justice Department said the companies collectively operate more than 1.3 million units in 43 states.

Cortland Management, which oversees 80,000 rental units, has already agreed to a consent decree barring it from using competitors’ sensitive data to run any pricing models and from using third-party pricing algorithms without the supervision of a court-appointed monitor.

the Amended complaint RealPage claims against RealPage and the landlords that the landlords directly shared information about their pricing plans and settings within RealPage’s YieldStar program with each other. For example, in September 2020, Camden’s director of revenue management allegedly spoke with the director of Greystar’s revenue management team to discuss how they planned to handle pricing in the upcoming quarter.

“Geystar’s manager also disclosed his practices regarding accepting YieldStar fares and using perks,” according to the lawsuit. “As the conversation continued, the two competitors exchanged additional highly sensitive information about occupancy – including in specific markets – demand, and the strategic use of concessions.”

The DOJ also alleges that landlords participated in “user groups” hosted by RealPage during which they discussed how to modify the algorithms’ pricing methodologies as well as their rental strategies. The complaint includes a series of anecdotes from these user group sessions in which landlords allegedly shared non-public information with their competitors, and RealPage employees allegedly told landlords to “raise new and renewed rates” and “trust the science” of RealPage’s algorithms.

The Justice Department was joined in the lawsuit by attorneys general from 10 states.