The Justice Department 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 the department’s antitrust complaint filed in August which accused property management software maker RealPage of engaging in illegal price-fixing to reduce competition among landlords so that prices – and profits – would soar. Officials conducted a two-year investigation into the scheme a 2022 ProPublica story it revealed how RealPage helped landlords set rents across the country in a way that legal experts say could lead to cartel behavior.
Together, the six landlords manage more than 1.3 million apartments in 43 states and the District of Columbia. The prosecutor’s office has already concluded a settlement agreement with one of them.
“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared confidential information about rental prices and used algorithms to coordinate to maintain high rental prices,” said Acting Assistant Attorney General Doha Meki from the antimonopoly department of the Ministry of Justice. . The lawsuit seeks to end “their practice of putting profits over people” and make housing more affordable.
The lawsuit is the latest development since ProPublica’s initial investigation. Since 2022, senators have passed legislation seeking to ban the use of rental algorithms similar to RealPage’s, and tenants have filed dozens of federal lawsuits. Cities across the country, including San Francisco, Philadelphia and Minneapolis, have also banned landlords from using similar algorithms to set rents.
The popular RealPage software collected non-public price information from multiple property managers and ran it through a common algorithm that then recommended optimal rent levels to those who used it — in violation of rules that prohibit such coordination, federal prosecutors allege. They also accused landlords of improperly communicating prices directly through calls, emails and participation in “user group” forums hosted by RealPage.
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The company is pushing landlords to use an “auto-accept” feature in its software that makes it harder for property managers to reject its offers, authorities said.
RealPage senior vice president Jennifer Bowcock called the federal case “misleading” and said the company “will vigorously defend itself and our customers against the Department of Justice’s allegations.” RealPage had already changed its software to remove non-public data, even though its technology was legal and “pro-competitive,” she said.
“It’s time to stop looking to RealPage — and now to our customers — for housing affordability issues when the root cause of high home prices is the lack of housing that we’ve been talking about from the beginning,” she said.
Three of the landlords sued this week appeared in ProPublica’s 2022 article, including the nation’s largest landlord Greystar and Camden Property Trust.
Camden CEO Rick Campo told the news organization at the time that the apartment market in Houston, where the company is headquartered, was so large and diverse that “it would be hard to argue that there is any kind of price-fixing.”
But when Camden adopted new rent-setting technology in 2006, the company found that its profits rose even as more tenants moved out.
“The net effect of driving revenue and crowding people out was $10 million in revenue,” Campo told the trade publication at the time. (He later said the quote did not reflect how he or Camden feel about renters today.)
Neither Campa nor Camden responded to a request for comment.
Greystar, the largest rental manager and owner in the US, said in a statement that it was “disappointed” that the Justice Department had joined the company in the lawsuit.
“Greystar has never engaged in anti-competitive practices,” the South Carolina-based company said in a statement. “We will vigorously defend ourselves in this lawsuit.”
Analysis of ProPublica data for 2022. also found that Willow Bridge Property Company (formerly Lincoln Residential) managed dozens of buildings in markets where rents were rising rapidly. The company did not immediately respond to a request for comment on the Justice Department lawsuit.
One property owner and manager, Cortland, has already agreed to stop using competitors’ non-public data to train or run pricing models under a plea deal with federal prosecutors. The proposed agreement has been referred to the court for review.
Based in Atlanta, Cortland operates more than 80,000 rental locations in 13 states. A related federal criminal investigation that led to a search of his headquarters in May 2024 has been closed, the spokesman said.
A spokesman said the company was “pleased” to announce the deal.
“We believe we were able to achieve this result only because Cortland invested years and significant internal resources in developing proprietary revenue management software that does not rely on data from external, non-public sources,” the spokesperson said.
Income management software can help landlords “effectively” manage rents and avoid discrimination, said a representative for defendant Cushman & Wakefield, which also owns defendant Pinnacle. A spokesperson said that only as a manager does the company not “set strategy, pricing or occupancy,” decide which software to use, or make software recommendations.
The lawsuit also names LivCor Blackstone as a defendant. Blackstone did not immediately respond to requests for comment.
In addition to naming the landlords as defendants in the lawsuit, 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 nation’s most populous, California, which has 17 million renters.
RealPage reports that “less than 10% of all U.S. rental properties use RealPage’s software to offer rental prices, and our software recommendations are accepted less than half of the time.”
But White House report in December said that this number could be higher. It says RealPage and census data show that 1 in 4 rental locations nationwide use RealPage’s pricing algorithm. And the company’s penetration is higher in some markets, the report said.
Using models of what competitive markets would look like, the researchers found that algorithmic pricing costs tenants an average of $70 per month more, or 4% of their rent. In six major metro areas, the cost exceeds $100 a month, the report noted.
The report estimated the total additional costs for renters from the use of such algorithms in 2023 at approximately $3.8 billion.
RealPage said the analysis was “riddled with erroneous assumptions” and that the White House never contacted the company about the report.
The fate of the Justice Department’s lawsuit against the new administration is unclear. US President-elect Donald Trump has appointed Gail Slater, a veteran antitrust lawyer and economic adviser to J.D. Vance, to head the department’s antitrust division.
