Oft-embattled rental data company RealPage announced Wednesday it’s embarking on a new battle, this time with a California city that last year limited the use of technology in setting rents.
The lawsuit against Berkeley, California, stems from a rule the local city council passed on March 25, and which is set to go into effect on April 24. The rule aimed to bar rental companies from using artificial intelligence and pricing algorithms when setting rents.
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But in a statement, RealPage describes the rule as a “sweeping and unconstitutional ordinance that bans lawful speech.” The statement also argues that the rule came about after “an intentional campaign of misinformation and often-repeated false claims.” The speech in question specifically relates to RealPage’s use of data, and the company wants a judge to stop Berkeley’s rule from going into effect.
“RealPage is seeking a judgment and injunction against the city’s recently adopted ordinance that seeks to prohibit the use of math and publicly available information to provide advice or recommendations to its customers who own and manage rental housing properties,” the statement explains. “Specifically, the ordinance seeks to ban algorithms that use any ‘information’ to advise or recommend market-appropriate rent prices for rental housing properties.”
Inman has reached out to the city of Berkeley and will update this story with any comment it provides.
The lawsuit comes as RealPage grapples with increasing pressure over its pricing technology. Several years ago, for example, RealPage was the subject of a ProPublica report suggesting the company’s software elevated rental prices. The report led to multiple class action lawsuits, as well as proposed legislation that would crack down on the algorithmic pricing of rents. Eventually, during her presidential campaign, Vice President Kamala Harris indicated that she wanted to take on rent price algorithms as part of her housing platform.
The U.S. Department of Justice eventually opened a criminal investigation, but ended it in December. However, a civil case involving the company is still ongoing.
Across the cases, critics have argued that RealPage’s technology — which uses data to make rent price recommendations — lets landlords conspire to elevate prices.
RealPage, however, has consistently pushed back against those claims. It reiterated that pushback Wednesday in its statement, saying the company’s landlord-customers “decide their own rent prices” and “always have 100 percent discretion to accept or reject software price recommendations.”
The statement also notes that RealPage customers “accept recommendations less than 50 percent of the time.”
“RealPage revenue management software makes price recommendations in all directions — up, down or no change – to align with property-specific objectives of the housing providers using the software,” the statement continues. “RealPage revenue management software is not ‘price fixing software’ or a ‘coordinated pricing algorithm.’ It evaluates internal supply and demand data from the subject property along with publicly available rent data from other properties to generate personalized price recommendations that align with the customer’s unique asset strategy.”
Still, rental pricing algorithms remain in the crosshairs of many lawmakers. In February, for example, congressional Democrats reintroduced a bill that would require companies to disclose the use of algorithms when setting rental prices.
In that context, RealPage’s legal battle with Berkeley is more than just a local fight but rather a case study in how courts generally may view a still-polarizing technology.
