DOJ accuses nation's largest landlords of scheme to rip-off tenants

The Department of Justice on Tuesday sued six of the nation’s largest landlords, accusing them of using a pricing algorithm to improperly work together to raise rents across the country.

The lawsuit expands an antitrust complaint the department filed in August that accused property management software-maker RealPage of engaging in illegal price-fixing to reduce competition among landlords so prices — and profits — would soar. Officials conducted a two-year investigation into the scheme following a 2022 ProPublica story that showed how RealPage was helping landlords set rents across the country in a way that legal experts said could result in cartel-like behavior.

Together, the six landlords manage more than 1.3 million apartments in 43 states and the District of Columbia. Prosecutors have already negotiated a settlement with one of them.

“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 acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. The suit seeks to end “their practice of putting profits over people” and to make housing more affordable.

The legal action is the latest development to follow ProPublica’s initial investigation. Since 2022, senators have introduced legislation seeking to ban the use of rent algorithms similar to RealPage’s, and tenants have filed dozens of ongoing federal lawsuits. Cities around the country, including San Francisco, Philadelphia and Minneapolis, have also moved to bar landlords from using similar algorithms to set rents.

RealPage’s popular software was collecting nonpublic pricing information from multiple property managers and feeding it through a common algorithm, which then recommended an optimal rent level to those who used it — in violation of rules that prohibit such coordination, federal prosecutors alleged. They also accused the landlords of improperly communicating directly about their pricing through calls, emails and participation in “user group” forums hosted by RealPage.

The company pushes landlords to use an “auto-accept” feature on its software, authorities said, and makes it onerous for property managers to reject its suggestions.

RealPage Senior Vice President Jennifer Bowcock called the federal case “flawed” and said the company is “committed to vigorously defending ourselves and our customers against the DOJ’s accusations.” RealPage has already changed its software to remove nonpublic data, despite its view that its technology was legal and “pro-competitive,” she said.

“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, which we have been saying from the beginning,” she said.

Three of the landlords sued in this week’s action appeared in ProPublica’s 2022 story, including the nation’s biggest landlord, Greystar, and Camden Property Trust.

Camden CEO Ric Campo told the news organization at the time that the apartment market in Houston, where the company is headquartered, was so big and diverse that “it would be hard to argue there was some kind of price fixing.”

But when Camden adopted the nascent rent-setting technology in 2006, the company found that its profits grew even though more tenants were moving out.

“The net effect of driving revenue and pushing people out was $10 million in income,” Campo told a trade publication then. (He later said that quote doesn’t reflect how he or Camden views renters today.)

Neither Campo nor Camden responded to a request for comment.

Greystar, the biggest manager and owner of rentals in the U.S., said in a statement that it was “disappointed” that the Justice Department added the company to the suit.

“At no time did Greystar engage in any anti-competitive practices,” the statement from the South Carolina-based company said. “We will vigorously defend ourselves in this lawsuit.”

ProPublica’s 2022 data analysis also found Willow Bridge Property Company (formerly Lincoln Residential) managed dozens of buildings in markets that had seen fast growth in rent. The company did not immediately respond to a request for comment about the Justice Department lawsuit.

One property owner and manager, Cortland, has already agreed to stop using competitors’ nonpublic data to train or run pricing models under a settlement with federal prosecutors. The proposed agreement has been submitted to the court for consideration.

Atlanta-based Cortland manages over 80,000 rentals in 13 states. A related federal criminal investigation that led to a May 2024 search of its headquarters has been closed, a spokesperson said.

The spokesperson said the company is “pleased” to announce the settlement.

“We believe we were only able to achieve this result because Cortland has invested years and significant internal resources into developing a proprietary revenue management software tool that does not rely on data from external, nonpublic sources,” the spokesperson said.

Revenue management software can help landlords manage rents “efficiently” and avoid discrimination, said a spokesperson for defendant Cushman & Wakefield, which also owns defendant Pinnacle. The spokesperson said that as a manager only, the company does not “set strategy, pricing, or occupancy targets,” decide which software to use, or whether to accept any software’s recommendations.

The lawsuit also named as a defendant Blackstone’s LivCor. Blackstone did not immediately respond to requests for comment.

In addition to naming landlords as defendants in the claim, it also added the attorneys general of Illinois and Massachusetts as co-plaintiffs, bringing the total number of participating states to 10. The states include the country’s most populous — California, which has 17 million renters.

RealPage said that “fewer than 10% of all rental housing units in the U.S. use RealPage software to suggest rental prices, and our software recommendations are accepted less than half the time.”

But a White House report in December said that number could be higher. It said RealPage and census data suggest that as many as 1 in 4 rentals nationwide use a RealPage pricing algorithm. And the company’s penetration is higher in some markets, it said.

Using models of what competitive markets would look like, researchers found that algorithmic pricing costs renters in units where it is used $70 more a month, or 4% of rent, on average. In six major metro areas, the cost exceeds $100 a month, the report found.

The report estimated the total added cost to renters from the use of such algorithms in 2023 to be roughly $3.8 billion.

RealPage said that the analysis is “riddled with flawed assumptions,” and that the White House never contacted the company about the report.

The fate of the Justice Department’s lawsuit under the incoming administration is unclear. President-elect Donald Trump has nominated Gail Slater, a veteran antitrust attorney and economic advisor to JD Vance, to lead the department’s antitrust division.