Dive Brief:

• The Justice Department is planning a civil suit against RealPage for “collusive conduct in the rental housing market,” according to Politico. 
• DOJ staff recommended a suit accusing the Richardson, Texas-based company of “selling software that enables landlords to illegally share confidential pricing information in order to collude on setting rents,” Politico reported. 
• The DOJ is also considering a complaint focused on landlords' ability to match vacancy rates, which essentially restricts supply at competing buildings, according to Politico. In late 2022, the DOJ’s antitrust attorneys reportedly opened a civil investigation into RealPage’s algorithm.

Dive Insight:

The DOJ declined to comment to Multifamily Dive. RealPage pointed out in an email to Multifamily Dive that its YieldStar software platform withstood legal scrutiny when the company purchased Lease Rent Options in 2017.

“While we don’t comment on rumors or speculation, I can tell you that the DOJ extensively reviewed LRO and YieldStar in 2017, without objecting to, much less challenging, any feature of the products,” said Jennifer Bowcock, senior vice president of communications at RealPage. “RealPage’s revenue management products are fundamentally the same today as they were when the DOJ reviewed them in 2017.”

The report that the DOJ is considering a suit against RealPage comes less than two months after the FBI performed an unannounced investigation at the Atlanta headquarters of apartment owner and manager Cortland.

“We can confirm that the Federal Bureau of Investigation executed a limited search warrant at our Atlanta office as part of an ongoing investigation by the U.S. Department of Justice into potential antitrust violations in the multifamily housing industry,” Cortland said in a statement provided to Multifamily Dive in May.

In March, the Department of Justice also opened a criminal investigation into RealPage, as well as some of the large apartment owners and managers that use the company’s pricing software, to determine if the firm is facilitating price fixing, unnamed sources told Politico.

The DOJ has also waded into antitrust suits against RealPage. Last fall, it filed a brief in U.S. District Court for the Middle District of Tennessee, saying a combined antitrust case brought by a group of renters against RealPage and multiple landlords should move forward and that apartment operators’ use of a shared algorithm is illegal under the per se rule of antitrust law.

Apartment pricing has been a target of state and federal investigators since a ProPublica report investigating RealPage’s model in October 2022. In the months following the report, more than 30 class-action suits were filed against RealPage and apartment owners and managers. These cases were consolidated into the one lawsuit that is moving forward in Tennessee.

The Biden administration has been focusing on cracking down on what it sees as anti-competitive activity in the economy, targeting hotels and other industries. 

RealPage response

After months of silence, RealPage posted a statement on the antitrust allegations in June.

RealPage said that “false and misleading” statements have been made about the company and its software, after the ProPublica exposé. 

In its statement, RealPage said that its customers “always have 100% discretion to accept or reject software price recommendations” and are never punished for declining recommendations. In a suit filed last year, Washington, D.C., Attorney General Brian Schwalb claimed that the company policed its contracts and that landlords abided by its suggested rents more than 90% of the time.

The company’s revenue management software also can make price recommendations to lower rents or not change them, according to the company.  “RealPage revenue management software never recommends that a customer withhold vacant units from the market,” the company said in the statement. “In fact, properties using our revenue management products consistently achieve vacancy rates below the national average.”

In the company statement, RealPage CEO and President Dana Jones shifted the blame to overall housing affordability for the skyrocketing rents in the market. 

“Housing affordability should be the real focus. RealPage is proud of the role our customers play in providing safe and affordable housing to millions of people,” Jones said. “Despite the noise, we will continue to innovate with confidence and make sure our solutions continue to benefit residents and housing providers, alike.”

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