After SF Supes Banned It Locally, Rent Price Software RealPage Gets Sued by US Justice Department

Less than a month after the SF Board of Supervisors banned a rental price algorithm tool from being used here, the company called RealPage that makes that tool was just sued by the US Department of Justice for illegal price-fixing.

Often when the San Francisco Board of Supervisors is the first in the nation to do something, they end up getting widely mocked for it. But the board may have been onto something in late July when they banned algorithmic software used to set rental prices, notably a software tool from a company called RealPage.

“RealPage has exacerbated our rent crisis and empowered corporate landlords to intentionally keep units vacant,” the measure’s authors Supervisor Aaron Peskin said before the board’s unanimous vote to ban it. “So we’re taking action locally to ensure our working renters can afford to live here.”

We say they may have been onto something, because now barely three weeks later, the US Department of Justice announced on Friday that they were suing RealPage for price-fixing and collusion among landlords. The suit was actually filed by the Department of Justice, but also includes eight states among the plaintiffs bringing the suit, including California and Attorney General Rob Bonta.

“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” US Attorney General Merrick Garland said in a press release. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents.”

While the company is called RealPage, the actual software tool in question is called YieldStar. Landlords pay to use it, and it tracks all their rental prices to suggest the maximum rent that can be charged for a unit. The Department of Justice argues this is collusion, and anti-competitive price-fixing.

And for good measure, the Justice Department included one quote from a landlord in their press release, who said, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term(s). That’s classic price fixing.”

Needless to say, Peskin is feeling pretty validated that the Justice Department followed his lead.

“Once again, San Francisco is a model for the nation,” Peskin said in a statement provided to SFist. “I applaud the Biden-Harris administration for not only enforcing against criminal price collusion but also for announcing that renters’ protections are going to be central to an economic recovery plan for America. The rent’s too high, and that’s why I’m banning the corporate software that enables tenant price gouging here in San Francisco.”

San Francisco’s ban on RealPage software is a step harsher than the federal lawsuit filed Friday. Here in SF, it’s a full ban on the products. Whereas the federal lawsuit is a civil suit, and would likely just yield (at most) a financial penalty or an agreement by RealPage to cease certain practices.

And San Francisco’s ban has not gone into effect yet. While the Supervisors passed the ban on July 30, the law would require a second reading, which cannot happen until the conclusion of the board’s summer recess on September 3.

Related: SF Supervisors Ban AI Software Used to Set Rental Prices, Arguing the Technology is Price-Fixing and Collusion [SFist]

Image: SFGovTV