Jersey City officials have taken a decisive step against the use of rental pricing algorithms by voting to ban landlords from utilizing software like RealPage due to rising concerns about potential price fixing practices.
This move follows a lawsuit filed by New Jersey Attorney General Matthew Platkin against RealPage and ten landlords, who are accused of implementing pricing software that allegedly coerced countless New Jersey residents into paying inflated rents.
In stark contrast, Colorado’s Democratic Governor Jared Polis recently vetoed legislation that aimed to make Colorado the first state to ban such rent-setting algorithms.
Critics assert that these algorithms, particularly the services offered by RealPage, contribute significantly to escalating housing costs nationally.
The federal lawsuit, initiated last year against RealPage, alleges that the company engaged in activities that facilitated illegal price coordination among landlords, leading to undue rent increases.
Currently, eight additional states, including Colorado, have joined the Department of Justice’s ongoing complaint against RealPage, which has adamantly denied any allegations of collusion and is actively seeking to dismiss the claims.
Opponents of RealPage argue that its software amalgamates confidential information from various real estate management companies, inadvertently allowing landlords to synchronize prices and restrict competition that could have minimized rent prices.
RealPage’s clientele includes major landlords who manage millions of rental units across the United States.
The Colorado legislation, which passed through a Democratic-controlled Legislature, sought to prohibit landlords from utilizing such pricing algorithms.
In his veto letter, Governor Polis acknowledged the intention behind the proposed bill but contended that any collusion among landlords would already contradict existing laws.
He asserted, “Reducing market friction through legitimate means that do not entail collusion is good for both renters and landlords.”
Polis emphasized that eliminating this tool could hinder landlords’ ability to manage properties effectively and identify market vacancies, which could adversely impact renters searching for housing.
In response to the veto, RealPage expressed support for the governor’s decision, describing it as “courageous leadership.”
Jennifer Bowcock, a spokesperson for RealPage, stated, “This is the right outcome for all of us who desire a healthy housing ecosystem that benefits Colorado renters and housing providers alike.”
However, the veto sparked outrage among housing advocates and the American Economic Liberties Project, a consumer advocacy organization at the forefront of opposition against RealPage and similar companies.
Sam Gilman, co-founder and president of the Community Economic Defense Project, criticized the veto, expressing that it sends a harmful message that corporate landlords can continue using secretive price-fixing algorithms to extract excess rent from vulnerable populations.
RealPage’s software generates daily pricing recommendations for landlords to consider for their available rental units.
While landlords are not mandated to follow these suggestions, critics argue that the availability of expansive confidential data enables RealPage clients to charge maximum rent levels.
Though Colorado was initially the first state to propose legislation targeting rental algorithms, at least six cities, including Jersey City, have enacted similar local ordinances over the past year.
These cities include Philadelphia, Minneapolis, San Francisco, Berkeley, California, and Providence, Rhode Island.
RealPage has vehemently opposed these local measures, even filing a lawsuit against Berkeley for what it claims violates its free speech rights and has stemmed from misinformation regarding its products.
According to RealPage, the primary factor influencing high rental prices is the insufficient housing supply rather than the use of its pricing algorithms.
The company also argues that its pricing recommendations sometimes encourage landlords to reduce rents, as landlords aim to maximize revenue and maintain occupancy levels.
Recently, a clause was added to a prominent Republican tax bill that would impose a decade-long ban on state and local regulations concerning artificial intelligence.
On a related note, five Democratic senators recently sent a letter to RealPage inquiring about its involvement in incorporating the AI moratorium wording into the legislation.
Bowcock, responding to the inquiry, clarified that RealPage had no part in the AI moratorium but advocated for a consistent and thoughtful regulatory framework for AI, rather than a fragmented approach through various state and local regulations.
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