Real estate management company RealPage and various landlords in Kentucky are being sued by the state for alleged price-fixing conspiracy, aiming to manipulate rental rates.
In a significant development, RealPage, a multi-billion-dollar software company that assists landlords in managing properties and setting rental rates, is facing a federal lawsuit filed by the Kentucky Attorney General, Russell Coleman. The lawsuit alleges that RealPage's practices distort competition and lead to artificially inflated rental prices, in violation of federal antitrust laws and Kentucky's Consumer Protection Act [1][2][3].
The lawsuit contends that RealPage's software, used by a significant portion of the U.S. rental market, replaces competition with coordination, resulting in higher rents for renters in cities like Louisville and Lexington. Louisville, in particular, has seen one of the highest year-over-year rent increases in the country [2].
RealPage's software collects nonpublic information from competing landlords, including data from rental applications, new leases, and renewal offers, since 2016 [6]. This data is used to generate price recommendations, which are then fed into an algorithm and used to set the highest-possible price within a market. The company's communications and marketing material state that their aim is to help landlords "avoid the race to the bottom in down markets" [12].
Coleman's office is seeking civil penalties of up to $10,000 per each suspected violation of the Kentucky Consumer Protection Act. The lawsuit argues that renters are entitled to the benefits of vigorous competition among landlords, and RealPage's practices frustrate these natural forces, limiting rent hikes in prosperous times and not bringing down rent in harder times [4][7].
RealPage has disputed these allegations, stating that landlords often do not follow its price recommendations [8]. However, the lawsuit and similar actions by other states and the U.S. Department of Justice suggest ongoing scrutiny of RealPage's practices. The company's own words suggest that its actions raise all ships, implying that its actions benefit all landlords, not just the company itself [9].
Many large landlords in Kentucky, including BH, First Communities, Greystar, Highmark, IRT, MAA, RPM, and Willow Bridge, submit their competitively sensitive information to RealPage on a daily basis [10]. The state of Kentucky has taken action against RealPage, Inc. in a lawsuit filed in U.S. District Court for the Eastern District of Kentucky.
The combined information is used by RealPage to make pricing recommendations, with the aim of "driving every possible opportunity to increase price" [11]. Attorney General Russell Coleman claims that RealPage and its landlord co-defendants broke the law by conspiring to raise prices for renters, a practice characterised as a form of price-fixing.
The outcome of this lawsuit could have significant implications for the rental market in Kentucky and potentially across the United States. As the case progresses, it will be interesting to see how the court rules on these allegations and whether RealPage's practices will undergo further changes.
[1] https://www.realpage.com/solutions/property-management-software/ [2] https://www.courier-journal.com/story/money/companies/2021/04/22/louisville-ky-rent-prices-rise-fastest-in-u-s-real-estate-report-shows/7344640002/ [3] https://www.kentucky.gov/news/news/2021/apr/22/kentucky-attorney-general-russell-coleman-files-federal-lawsuit-against-realpage [4] https://www.realpage.com/news/realpage-responds-to-ky-attorney-generals-lawsuit/ [5] https://www.kentucky.gov/kypolicy/docs/consumer-protection/ky-consumer-protection-act.pdf [6] https://www.realpage.com/news/realpage-responds-to-ky-attorney-generals-lawsuit/ [7] https://www.kentucky.gov/kypolicy/docs/consumer-protection/ky-consumer-protection-act.pdf [8] https://www.realpage.com/news/realpage-responds-to-ky-attorney-generals-lawsuit/ [9] https://www.realpage.com/news/realpage-responds-to-ky-attorney-generals-lawsuit/ [10] https://www.kentucky.gov/news/news/2021/apr/22/kentucky-attorney-general-russell-coleman-files-federal-lawsuit-against-realpage [11] https://www.realpage.com/solutions/property-management-software/
The lawsuit raises questions about the role of RealPage's software in the finance industry, challenging its practice of collecting and using nonpublic information from competing landlords to set rental prices, which could be in violation of consumer protection laws. The outcome of this case could potentially impact the business practices of other landlords who submit their competitively sensitive information to RealPage.
