Justice Department, NC Attorney General accuses RealPage of a scheme to help landlords hike rents
RALEIGH, NC (WWAY/AP) — Attorney General Josh Stein, alongside a coalition of state and federal officials, filed a bipartisan lawsuit Tuesday against RealPage, Inc., alleging the software company violated antitrust laws and artificially inflated apartment rents in North Carolina and across the United States.
The lawsuit, filed in the U.S. District Court for the Middle District of North Carolina, was joined by the U.S. Department of Justice and Attorneys General from California, Connecticut, Colorado, Minnesota, Oregon, Tennessee, and Washington.
“Few things are as important as our homes – but too many North Carolinians struggle to afford their apartment,” Stein said in a statement. “Rents are already too high. I will not tolerate any company scheming to block healthy competition among landlords. It raises rent, and it’s illegal.”
RealPage, known for its “revenue management software,” sells its services to property managers nationwide, including Wilmington and in the Triangle and Charlotte-Mecklenburg areas. In return for using RealPage’s software, property managers share detailed and nonpublic data with the company, such as information about units coming on the market, rent prices, and discounts.
According to the lawsuit, RealPage uses this sensitive information to suggest rent prices that maximize profits and allegedly pressures clients into accepting these recommendations, which the suit claims leads to artificially inflated rents and fewer affordable housing options.
Monica Burks, Policy Counsel at the Center for Responsible Lending, also commented on the situation, emphasizing the growing challenges in the housing market.
“Access to affordable housing options is becoming increasingly difficult,” Burks said. “Anti-competitive practices that inflate already high housing costs disadvantage individuals and families working hard to secure this basic need.”
The lawsuit stems from a year-long investigation into RealPage’s practices, which Attorney General Stein publicly announced in March 2024. The complaint seeks to prohibit RealPage and its affiliated property managers from sharing nonpublic information and engaging in practices that artificially inflate rent prices.
Rents across the U.S. saw a huge spike in 2021 and 2022, and though their growth has since tapered off, they remain stubbornly high for many tenants, thanks in part to a huge lack of housing supply.
Justice Department officials allege that RealPage is another reason for the high rents since the algorithm allows landlords to align their prices and avoid competition that would otherwise keep rents down.
“Americans should not have to pay more in rent simply because a company has found a new way to scheme with landlords to break the law,” Attorney General Merrick Garland told reporters.
In a statement, RealPage said the Justice Department’s claims were “devoid of merit and will do nothing to make housing more affordable.”
“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” the company said.
In an interview with the Associated Press, Dom Beveridge, a longtime expert in the revenue management field who is not connected to the lawsuit, gave a detailed, vociferous defense of revenue management software and said prosecutors have fundamentally misunderstood how such products work.
“If it were true that the software enabled price-fixing, I would 100% be on the side of the lawsuits — but it’s simply not what the software does,” said Beveridge, who briefly worked for RealPage when his company’s software was acquired by the firm in 2017. “These algorithms are only functionally capable of optimizing one property at a time. They can’t say, ‘I’m going to take property A, B and C and figure out collectively what they should do together,’ which is the allegation being made.”
He emphasized that property managers are incentivized to maximize revenue, which means keeping occupancy high, rather than constraining supply, as critics have alleged. Rather than being like an Uber “surge price,” revenue management tools help apartment managers align their inventory as if it were a game of Tetris, thereby actually increasing the supply available, Beveridge said.
The Justice Department points to RealPage executives’ own words about how their product maximizes prices for landlords. One executive said, “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
RealPage has noted that landlords are free to reject the price recommendations generated by its software. But the Justice Department alleges that doing so often requires a series of steps, including a conversation with a RealPage pricing adviser who can “stop property managers from acting on emotions.”
Beveridge argued that property managers’ adherence to the RealPage algorithm is not actually very high — about 40-50% of the rents that ultimately get posted fall within 1% of the algorithm’s recommendation, prosecutors said.
“That’s essentially a coin flip,” he said. “You should want people to be accepting about 90% of your recommendations because most price recommendations are really small.”
