As a part of a felony investigation, the FBI raided the places of work of Cortland, a property administration firm working in Arizona to search out out if it was concerned in an unlawful price-fixing scheme centered round AI-driven lease management software program.
In February, the Arizona Lawyer Common introduced a lawsuit in opposition to 9 main rental corporations for alleged value fixing. All 9 in addition to Cortland depend on RealPage, a pricing algorithm that takes market knowledge and determines how excessive rents may be with a view to maximize income.
A function piece by investigative outlet ProPublica in 2022 experiences that following the acquisition of a rival, by 2017 RealPage was pricing 2 million items nationwide. Many rental corporations discovered that they may improve their web working revenue between 3 and seven% with out minimizing vacancies—in different phrases, they may earn more money though that they had fewer tenants.
As early as 2018, ProPublica experiences, the FTC was conscious of RealPage’s actions, and the consideration that the agency’s breadth of clientele mixed with its encouragement to share personal pricing info and market knowledge between RealPage customers to extend the accuracy of the algorithm was paying homage to the particulars in earlier antitrust instances within the twentieth century.
Since that ProPublica story, rents in Arizona have gone up 30% on common, with even greater will increase seen in components of Phoenix and Tucson.
The Copper Courier, an Arizona outlet, experiences that the 9 rental administration corporations named within the Arizona AG swimsuit not solely managed over 100,000 rental items within the metropolitan areas the place rents have been rising the quickest, however that all of them used RealPage software program in at the least some instances to set unit costs.
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“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and instantly contributed to Arizona’s inexpensive housing disaster,” mentioned AG Kris Mayes. “This conspiracy stifled honest competitors and primarily established a rental monopoly in our state’s two largest metro areas.”
The Courier experiences that the FBI is investigating RealPage’s affect in allegations of price-fixing and monopolistic habits in 8 states and Washington D.C.
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RealPage denies and rejects the fees, saying the algorithm consists of publically out there knowledge, amongst different objections.
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