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Renters filed a lawsuit this week alleging that a company that makes price-setting software for apartments and nine of the nation’s biggest property managers formed a cartel to artificially inflate rents in violation of federal law.
The lawsuit was filed days after ProPublica published an investigation raising concerns that the software, sold by Texas-based RealPage, is potentially pushing rent prices above competitive levels, facilitating price-fixing, or both.
The proposed class-action lawsuit was filed in US District Court in San Diego.
In an email, a RealPage representative said that the company “strongly denies the allegations and will vigorously defend against the lawsuit.” She declined to comment further, saying the company does not comment on pending litigation.
The nine property managers named in the lawsuit did not respond immediately to a request for comment.
They included some of the nation’s largest landlords, such as Greystar, Lincoln Property Company, Equity Residential, Mid-America Apartment Communities, and FPI Management—which together manage hundreds of thousands of apartments.
Four of the five renters named in the suit were Greystar tenants. A fifth rented from Security Properties. Their apartments were located in San Diego, San Francisco, and two Washington state cities, Redmond and Everett.
The lawsuit accused the property managers and RealPage of forming “a cartel to artificially inflate the price of and artificially decrease the supply and output of multifamily residential real estate leases from competitive levels.”
RealPage’s software uses an algorithm to churn through a trove of data each night to suggest daily prices for available rental units. The software uses not only information about the apartment being priced and the property where it is located, but also private data on what nearby competitors are charging in rents. The software considers actual rents paid to those rivals—not just what they are advertising, the company told ProPublica.