DOJ files amended complaint against RealPage
Just a month after the company announced an investigation into its rental pricing practices had ended, the DOJ is back with an updated, expanded lawsuit.
The property management software company RealPage is once again in the crosshairs of the U.S. Department of Justice.
The agency, joined by several state co-plaintiffs, filed an amended complaint on Jan. 7 in its antitrust case against RealPage, adding some of the largest multifamily companies in the U.S. to the lawsuit.
How the scope has changed: In addition to RealPage, defendants now include six major rental investment or management companies — Greystar, LivCor, Camden, Cushman, Willow Bridge and Cortland — which operate more than 1.3 million units in 43 states and the District of Columbia, according to a news release from the DOJ.
The firms used RealPage's pricing algorithms — which the agency considers to be anticompetitive — and "participated in an unlawful scheme to decrease competition among landlords in apartment pricing, harming millions of American renters," the release stated.
"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 the price of rent high," said Doha Mekki, acting assistant attorney general of the Justice Department's antitrust division.
"Today's action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country," Mekki added.
In addition to the new defendants, attorneys general from two more states — Illinois and Massachusetts — have joined the group of plaintiffs.
A quick turn of events: It appeared that the DOJ was ending its investigation into RealPage last month, according to an announcement by the company. The lawsuit was originally filed last August, with attorneys general from California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington joining the suit at that time.
The company has defended its business practices, creating a website to refute what RealPage President and CEO Dana Jones refers to as "false claims." RealPage says it often recommends lowering rent prices when supply and demand dynamics indicate such action is needed, and the company "is proud of the role our customers play in providing safe and affordable housing to millions of people."
What RealPage had to say: In response to the amended filing, the company said it is "disappointed that the DOJ, just one month after abandoning its baseless criminal investigation and less than two weeks before the agency changes hands, is expanding its civil lawsuit related to use of revenue management software. Fewer than 10% of all rental housing units in the U.S. use RealPage software to suggest rental prices, and our software recommendations are accepted less than half the time, as the DOJ has acknowledged."
RealPage also noted its "software was purposely built to be legally compliant," arguing that "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 which we have been saying from the beginning."
Possible resolution for one defendant: The DOJ also announced a proposed consent decree with Cortland, one of the six landlords named in the lawsuit. If approved by the court, the DOJ would resolve all claims against the company, which operates 80,000 rental units in 13 states.
In return, Cortland would cooperate with the agency's investigation and stop using third-party software or algorithms to price apartments without the supervision of a court-appointed monitor.