In a significant move to protect tenants, Jersey City and Hoboken in Hudson County have recently prohibited the use of rent-setting algorithms that rely on non-public data, a decision aimed at curtailing potential price gouging by landlords.
Both cities have expressed concerns that such algorithms might facilitate coordinated pricing strategies, which may lead to inflated rental costs and diminished housing affordability for residents.
These local actions are part of a broader trend emerging across the United States, as cities grapple with the impact of technology on rental markets.
Last year, the New Jersey Attorney General, alongside federal officials, stepped into the fray with distinct lawsuits targeting companies that provide price-fixing software.
In 2022, a coalition that included the Justice Department and Attorneys General from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington filed a civil antitrust lawsuit against RealPage Inc.
The lawsuit accuses RealPage of orchestrating an unlawful scheme that stifles competition among landlords and seeks to monopolize the market for commercial revenue management software, which is used to price apartments.
The alleged practices by RealPage deny renters the competitive advantages typical in a free market, thereby affecting millions of Americans at risk of higher rental prices.
As part of a movement to combat algorithmic pricing, Jersey City became the first municipality in New Jersey to implement a ban on such software in May, followed closely by Hoboken in July.
The decision underscores the commitment of local officials to shield tenants from the negative ramifications of automated pricing tools that can result in unjust rent rises.
In addition to local ordinances, there is a growing push for statewide legislation in New Jersey aimed at banning these rent-setting algorithms altogether.
Several bills have been introduced in the New Jersey legislature, with one proposal seeking to outlaw the use and sale of algorithmic devices for establishing rental prices, and another making their use illegal.
New Jersey’s Attorney General has brought a lawsuit against RealPage and ten large landlords in the state, alleging they employed a rent-inflating scheme that violates antitrust and consumer protection laws through collusion facilitated by algorithmic software.
According to Attorney General Matthew Platkin, this alleged agreement resulted in tens of thousands of residents overpaying for their housing.
“I’m not going to tolerate corporate greed that violates the law and hurts our residents,” Platkin stated, emphasizing the need for accountability and reform.
He added that the lawsuit aims not only to halt RealPage’s illegal practices but also to recover profits obtained unlawfully.
This ongoing issue in New Jersey is echoed in other cities with San Francisco leading the charge as the first city in the nation to implement a ban on such pricing software.
In 2024, Philadelphia also passed legislation to restrict the use of nonpublic competitor data in setting rents, highlighting a trend among urban centers to challenge algorithm-driven rent pricing.
Cities like Minneapolis and San Diego have initiated their own bans this spring, further indicating a unified stance against the perceived unfairness of algorithmic rent-setting.
Officials in Jersey City and Hoboken believe that prohibiting the sharing of data between landlords for pricing purposes is essential to ensure a fair rental market.
As the battle against high rental prices continues, state and local officials remain steadfast in their commitment to advocating for tenant rights and affordable housing solutions.
RealPage has yet to respond to inquiries regarding these allegations and legal actions against it, which may have far-reaching implications for the property management software industry and many tenants struggling with housing costs.
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