Mega-landlord settles with DOJ for Mass. price fixing claims
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The U.S. Department of Justice and the landlord Greystar Management Services reached a deal to settle their legal fight over claims that the company used an algorithmic software to fix rental prices.
Why it matters: Greystar, the nation's largest landlord, runs apartment complexes across Massachusetts, including in Brighton, Revere and East Boston.
The big picture: The price fixing allegations come as the state grapples with a worsening housing crisis, partly due to limited housing supply.
Catch up quick: Six states and the DOJ sued the company behind the rent-setting software, Texas-based RealPage, last year, accusing the company of illegal price fixing and monopolization.
- Massachusetts and Illinois then joined an amended version of the lawsuit that named South Carolina-based Greystar and five other landlords.
- They accused the six landlords of colluding to raise rents across their properties, relying on RealPage's software.
State of play: Greystar agreed in the settlement to stop using any "anticompetitive algorithm" that sets rental prices using competitors' sensitive pricing data, per the settlement.
- The company also agreed to stop sharing its own sensitive information with competitors, stop attending RealPage's meetings convening competing landlords, accept a court-appointed monitor and cooperate with part of the federal legal fight against RealPage.
By the numbers: A White House report estimates that renters whose landlords used RealPage's algorithm paid an additional $70 a month on average in 2023.
- For Boston-area renters, the cost was $79 a month, per the analysis. The report happened independently of the multi-state lawsuit.
- That lawsuit didn't specify which Greystar properties used the algorithm.
What they're saying: Greystar didn't admit any wrongdoing as part of the settlement.
- The company said in a statement that it "firmly believes that its use of RealPage's revenue management software complies with all applicable laws."
- "We entered into these settlements to make clear the government's interpretation of the law and to ensure we continue to do things the right way," the company wrote.
Flashback: A 2022 ProPublica story revealed that RealPage worked with landlords to set rents nationwide in what legal experts said "may be artificially inflating rents and stifling competition."
- When the multi-state lawsuit began, RealPage refuted the allegations about its software with a six-page statement, saying landlords set their own prices and that RealPage "helps ensure that prospective residents have access to the best pricing available."
- One other landlord, Cortland, agreed to a settlement after being named in the amended lawsuit earlier this year.
What's next: A federal judge in North Carolina still has to approve the settlement.
- If approved, Greystar will have to meet certain requirements in 30 days and fulfill the other conditions by April 1.