The U.S. Department of Justice and Richardson, Texas-based RealPage, a global provider of AI-enabled software platforms for the real estate industry, have agreed to a settle a yearlong lawsuit that began under the Biden Administration.
RealPage would not have to pay any damages or admit any wrongdoing, but the settlement still must be approved by a judge.
“This resolution marks an important milestone for RealPage, our customers, and the multifamily industry,” said Dirk Wakeham, RealPage President and Chief Executive Officer. “Through it all, our teams remained focused on serving customers and advancing the technology the industry relies on every day. We are convinced that RealPage is part of the solution to addressing the cost of housing, helping operators make informed, independent decisions in a complex housing market. We are pleased to have reached this agreement with the DOJ, which brings the clarity and stability we have long sought and allows us to move forward with a continued focus on innovation and the shared goal of better outcomes for both housing providers and renters.”
Wakeham returned to RealPage in November as chief executive officer.
Software Provided Price Recommendations to Landlords
RealPage software provides daily recommendations that help landlords and their employees nationwide set prices for their available apartments. Landlords do not have to follow the suggestions, but critics have argued that because the software has access to a huge amount of confidential data, it helps RealPage’s clients charge the highest possible rent.
“RealPage was replacing competition with coordination, and renters paid the price,” said DOJ antitrust chief Gail Slater, who said that the settlement avoided a costly, time-consuming trial.
Under the terms of the proposed settlement, RealPage no longer can use that real-time data to determine price recommendations. Instead, the only nonpublic data that can be used to train the software’s algorithm must be at least one year old, ABC News reported.
“What does this mean for you and your family?” Slater said in a video statement. “It means more real competition in local housing markets. It means rents set by the market, not by a secret algorithm.”
In a statement, RealPage attorney Stephen Weissman said the company is pleased the DOJ worked with them to settle the matter.
“There has been a great deal of misinformation about how RealPage’s software works and the value it provides for both housing providers and renters,” Weissman said. “We believe that RealPage’s historical use of aggregated and anonymized nonpublic data, which include rents that are typically lower than advertised rents, has led to lower rents, less vacancies, and more procompetitive effects.”
More than two dozen property firms reached settlements over their use of RealPage
ABC News said that in the past few months, more than two dozen property management companies have reached settlements over their use of RealPage, including Greystar, the nation’s largest landlord, which agreed to pay $50 million to settle a class action lawsuit, and $7 million to settle a separate lawsuit filed by nine states.
Last month, the governors of California and New York signed laws to crack down on rent-setting software, and a growing list of cities, including Philadelphia and Seattle, have passed ordinances against the practice, ABC News reported. Ten states — California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee and Washington — had joined the DOJ’s antitrust lawsuit, although those states were not part of this settlement.
RealPage said in a release that the settlement reflects its long-standing commitment to compliance and responsible innovation that ensure its products benefit both property owners and their residents. It noted these key points:
No findings or admissions of liability: The agreement includes no financial penalties, damages, or findings or admissions of wrongdoing.
Continuity for customers: There is no disruption to customer operations. All RealPage solutions remain fully available, compliant, and configurable to meet evolving legal requirements.
Formalizing product modifications already made or planned: The settlement essentially commits RealPage to the modifications to its revenue management solutions that it already has been implementing
since over a year ago.
Independent oversight: RealPage has agreed to an independent monitor to confirm the ongoing compliance of our revenue management products, reflecting our confidence in their integrity and our long-standing commitment to responsible operation and innovation.
