‘Classic price fixing’: MD attorney general says big landlords collude with tech company to set rent prices

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A “cartel” of corporate landlords and a tech company colludes to raise rents for hundreds of thousands of Maryland residents, according to a lawsuit filed Wednesday by the Maryland Attorney General’s Office.

The civil complaint, in Prince George’s County Circuit Court, alleges Texas-based tech company RealPage use a powerful algorithm to inflate prices and that the landlords illegally share data and allow RealPage to set prices.

“RealPage and the named landlords worked together to raise the cost of their apartments, making it hard for Maryland renters to put a roof over their heads,” Maryland Attorney General Anthony Brown stated in a news release.

The landlords named in the complaint are Morgan Properties Management Company, Bozzuto Management Company, Greystar Management Services, AvalonBay Communities, UDR and Highmark Residential.

“Defendants’ anti-competitive agreement has exacerbated Maryland’s affordable housing crisis, forcing Maryland renters to overpay, month after month, for what is typically the single largest expense in their lives: rent,” the complaint states.

One unnamed RealPage client, according to the complaint, said, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing.”

RELATED: Justice Department accuses 6 major landlords of scheming to keep rents high

The complaint redacted the locations of the apartments, as well as the number of units and buildings, but the release from Brown’s office states that the defendants own over 100,000 units and rent to “hundreds of thousands” of Marylanders, who have been forced to overpay by millions of dollars.

RealPage spokeswoman Jennifer Bowcock said the algorithm has a “very low penetration rate in Maryland,” and said landlords accept RealPage’s recommended rent prices “less than half the time.” Bowcock said Brown is “recycling the inaccuracies of predecessor cases to blame RealPage for the state’s housing affordability challenges.”

“We encourage the state’s public leaders to focus on meeting greater demand for housing with more supply,” Bowcock wrote in an email. “Marylanders deserve real solutions to increase access to affordable housing, not simply playing the blame game.”

The Daily Record also reached out to each of the other defendants for comment on the complaint in Maryland. None responded, except for Greystar, which declined to comment on the attorney general’s lawsuit but pointed to a statement from last week about the DOJ’s lawsuit.

“We are disappointed that the DOJ added us and other operators to their lawsuit against RealPage,” the spokesperson stated. “Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices.”

In previous public statements, RealPage denied violating antitrust laws.

“We remain unwavering in our belief that RealPage’s revenue management software benefits both housing providers and residents and that the remaining lawsuits are based on misinformation and baseless allegations,” a December statement said.

Brown’s office is alleging two violations of the Maryland Antitrust Act; one for agreeing to set rents for multifamily residential leases and another for agreeing to “exchange non-public, competitively sensitive information.”

It says they agreed to “delegate a substantial majority of their price-setting responsibility to RealPage.”

The complaint also implicates “unnamed co-conspirators,” other apartment owners who used RealPage software and raised rent illegally. The AG’s investigation is ongoing and more landlords could be named, it states.

RealPage is also being sued by the U.S. Department of Justice over alleged anti-competitive practices. The DOJ originally sued the company in federal court in North Carolina, accompanied by several states, including California, Tennessee and Massachusetts. The DOJ filed an amended complaint last week, adding several corporate landlords as defendants, including Greystar.

The DOJ investigation followed a 2022 report on RealPage by ProPublica.

One RealPage executive, according to ProPublica, said the AI-powered software was driving higher prices.

“As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually,” the executive said at a real estate tech conference in 2021.

Editor’s note: this story has been updated with a statement from RealPage.