Class-action lawsuits are not the only problem facing RealPage: The Department of Justice has opened an investigation into the proptech company.
The agency’s Antitrust Division launched a probe into the Texas-based firm, ProPublica reported. It is looking into whether the company’s rent-setting software is facilitating collusion among apartment landlords.
Congressional leaders pushed for an investigation following a ProPublica report last month raised suspicions that the software is pushing rents above competitive levels and enabling landlords to coordinate pricing, which would violate federal antitrust laws.
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RealPage did not respond to the publication’s request for comment.
This isn’t the first time RealPage has drawn scrutiny from the Justice Department. In 2017, the company merged with rival Lease Rent Options, greatly expanding RealPage’s customer reach. The agency flagged the $300 million merger as potentially anticompetitive, but the Trump appointees in charge didn’t challenge the merger in court.
Private litigation was triggered, however, by the ProPublica report on RealPage’s YieldStar software. The story suggested the software could inflate apartment rents and suppress competition by telling landlords what their fellow owners are charging. The platform analyzes data gathered from clients, including confidential information on competitors’ rents, to recommend rent for an available unit.
Landlords can reject the software’s suggestions, but rarely do. RealPage employees said as many as 90 percent of recommendations are accepted; the company previously took credit for the platform’s role in driving apartment rents up by 14.5 percent.
Shortly after ProPublica’s bombshell, RealPage and several property management firms were served with a class-action lawsuit accusing them of forming a “cartel” to artificially inflate apartment prices above competitive levels.
Last month, a University of Washington student filed a separate class-action lawsuit accusing RealPage of colluding with student housing providers to inflate rent. Prominent multifamily landlords named in the lawsuit include Greystar and Cushman & Wakefield.
— Holden Walter-Warner