Illinois joins Justice Department lawsuit against RealPage and big landlords

Illinois Attorney General Kwame Raoul joined the U.S. Department of Justice and nine other state attorneys general in a lawsuit against real estate software company RealPage and some of the nation’s largest landlords.

The civil antitrust complaint filed Tuesday alleges the companies coordinated to keep rents high by using an algorithm to help set rents and privately sharing sensitive information to boost profits.

The amended lawsuit was filed in the U.S. District Court for the Middle District of North Carolina against RealPage and six landlords. They include Chicago-based LivCor; Cushman & Wakefield, whose residential property management business formerly operated independently as Pinnacle; Camden Property Trust; Greystar; Willow Bridge Property and Cortland Management.

Together, the landlords operate more than 1.3 million housing units in 43 states and the District of Columbia, according to the Justice Department. All manage multifamily apartment buildings; several own some or all of the properties under their management.

“Access to affordable housing is a basic human right. It is unacceptable that the people of Illinois should have to pay higher rental rates because a scheme to utilize new technology and break a long-standing law has stacked the odds against them,” Raoul said in a statment.

“My office will continue to enforce the antitrust laws to protect competition that will give Illinois renters housing options that best meet their needs.”

In addition to Illinois, the attorneys general of Massachusetts, California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington are plaintiffs.

The lawsuit accuses the landlords of sharing sensitive data on rents and occupancy with competing firms via email, phone calls or in groups. The information shared included renewal rates, how often they accept an algorithm’s price recommendation, the use of concessions such as offering one month free, and even their approach to pricing for the next quarter, according to the lawsuit.

“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.

The lawsuit “seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country,” Mekki said.

The Justice Department said Cortland, which operates in Chicago and many other U.S. cities, has agreed to cooperate with prosecutors. The proposed settlement would restrict how the company can use their competitors’ data and algorithms to set rents.

The landlords were added to an existing lawsuit against RealPage, which runs an algorithm that recommends rental prices to landlords.

Jennifer Bowcock, RealPage’s senior vice president for communications, said in a statement to the AP that its software is used on fewer than 10% of rental units in the U.S., and its price recommendations are used less than half the time.

“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 undersupply of housing,” Bowcock said.

Contributing: AP