At the end of last year, the property management software company RealPage found itself the focus of an investigative report about its role in rent increases. This led to a class action lawsuit that claimed that their product, YeildStar, shared pricing data, effectively creating a “cartel” that was allowing landlords to collude on rent prices. The lawsuit also named some of the company’s largest clients in the suit, holding them liable for using software they had no role in creating.
There have been a lot of opinions on the merits of this case. There is evidence that the neighborhoods where YeildStar was most prevalently used have had disproportionally high rent increases. But whether the software was used by enough of the overall market to really inflate prices is still up for debate. Ultimately, the jury will have to decide.
But even as RealPage waits to hear its fate in the lawsuit another, maybe more worrisome, legal issue has arisen. Yesterday, the Attorney General of Washington D.C. filed a complaint against RealPage and 14 of the area’s largest landlords, claiming that their use of YieldStar (as well as their new AI Revenue Management referred to by AIRM) violated the district’s Antitrust Act. The complaint claims that the rent suggested by the software created a way for landlords to not compete on price, an important piece of any antitrust case.
“Rather than pursue a “heads in beds” strategy—i.e., competing on price to attract the most renters—Defendants have conspired to share information, limit supply, and drive up rents. In a truly competitive market, one would expect competitors to keep their pricing strategies confidential—especially if they believe those strategies provide a competitive edge. Here, in contrast, Defendants understand that recruiting more would-be competitors to their anticompetitive scheme only increases their mutual ability to extract unlawfully higher rent, confident that their competitors will not dramatically undercut their prices.”
The way that RealPage automated the process for landlords to insert the suggested rental prices in their listing was also cited in the documentation: “RealPage facilitates landlords’ compliance with the agreement in many ways, including through a software feature that automatically accepts rents generated by the RM Software. In both AIRM and YieldStar, this feature is called “Auto Pilot” and, if enabled, causes the RealPage-generated rents to be automatically “accepted” and deployed to the landlord’s property management system. LRO offers a similar feature referred to as “Rent Syndication,” which automatically sends LRO pricing information to Internet Listing Services where the landlord’s units are marketed.”
The brief then goes on to use RealPage’s advertising, landlord’s earnings calls, and even events like OPTECH and NMHC as further evidence of collusion. It also brings in RealPage’s use of Yardi’s data as further proof they gave access to non-public data to landlords as a way to help them inflate prices: “RealPage ingests non-public data from competing property management systems, including from Yardi, which is OneSite’s leading competitor in the market.”
These are all very serious allegations, but so too were those of the class action suit. The difference here is that, unlike independent lawyers for class action suits, an Attorney General won’t file a claim like this unless they are fairly certain that they will win the case. RealPage and its clients have a lot of legal prowess themselves and will fight this case for all its worth, but, as of right now, things are not looking good for them or any company that helps landlords share data.
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