Federal prosecutors’ fight against RealPage has arrived in New Jersey.
The Garden State sued RealPage and 10 landlords for allegedly colluding to illegally raise rents, according to the New Jersey Attorney General’s office. Prosecutors alleged the landlords, which include AvalonBay and Greystar, worked with the algorithmic rent-pricing software company to coordinate pricing and avoid competition.
“The defendants in this case unlawfully lined their pockets at the expense of New Jersey renters who struggled to pay the increasingly unlivable price levels imposed by this cartel,” Attorney General Matthew Platkin said in a statement.
The complaint echoes concerns raised in other lawsuits by individual states and the Department of Justice. The alleged collusion centers on RealPage’s automated pricing software, which relies on proprietary, non-public data provided by landlords to provide suggested rental prices to its clients — those same landlords, according to the complaint.
Authorities allege the landlords also directly collaborated on pricing, sharing data on occupancy rates, leasing activity, concessions and pricing strategies and participating in user groups, secret shops and industry meetings to coordinate tactics.
The complaint also alleges that the landlords worked to actively recruit other participants in an effort to drive rents higher.
“The housing market in New Jersey is already stacked in favor of landlords, but the defendants wanted more,” stated Jeremy Hollander, Acting Director of the Division of Consumer Affairs.
The complaint claims that RealPage software is anticompetitive by design. The software restricts price reductions by requiring landlords to use the suggested price with tools like automatic price acceptance, compliance tracking, “secret shop” tests and direct oversight.
The state is alleging that the defendants violated the Sherman Act and the New Jersey Antitrust Act, which constitute violations of the New Jersey Consumer Fraud Act.
The complaint mentions other landlords as co-conspirators, and the state kept open the possibility of adding additional defendants to the suit. Other named defendants include Morgan Properties, LeFrak Estates, Aion Management, Cammeby’s Management, Veris, Russo Property Management and Bozzuto.
The Department of Justice, along with 10 state co-plaintiffs, sued RealPage last year for violating antitrust laws. In January, the department named six major landlords to the suit, including Greystar Real Estate Partners, which had its management services division named in the New Jersey lawsuit.
RealPage did not respond to a request for comment.
