Arizona Attorney General Kris Mayes has filed a lawsuit against RealPage, Inc. and nine major residential apartment landlords operating in Arizona for price-fixing and conspiring to illegally raise rents for hundreds of thousands of Arizona renters in the Phoenix and Tucson metro areas, according to a release.
RealPage is a software company that offers what it calls “revenue management” to its clients, including those named as its co-defendants in this lawsuit.
“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable-housing crisis,” Mayes said in the release.
“In the last two years, residential rents in Phoenix and Tucson have risen by at least 30% in large part because of this conspiracy that stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas,” Mayes said. “RealPage and its co-defendants must be held accountable for their role in the astronomical rent increases forced on Arizonans.”
RealPage used its revenue management algorithm to illegally set prices for all participants,” the Arizona Attorney General’s office told Azfamily.com. Specifically, the state alleges that the defendants “conspired to enrich themselves during a period when inflation was at historic highs and Arizona renters struggled to keep up with massive rent increases.”
Price-fixing training alleged
Mayes alleged RealPage provided training to the landlords and instructed them not to mention RealPage or pricing algorithms when explaining rent increases to tenants. Instead, she claims leasing companies were taught by RealPage to lie and to say that units were “individual” and “concessions” were built into the price. In reality, prices were set by RealPage in Phoenix and Tucson.
“RealPage and their co-conspirators concealed this illegal price-fixing scheme from potential renters,” Mayes said.
The attorney general also said RealPage used what they called “revenue management software,” where they compiled competitively sensitive data on unit pricing and occupancy provided by the nine defendant competitors.
“They were not competing at all. They were colluding with one another. Using this sensitive data, RealPage directed the competitors which units to rent, when to rent them and at what price. This was not a fair market at work, this was a fixed market,” she said.
The attorney general’s lawsuit specifically alleges that:
- The defendant landlords illegally colluded with RealPage to artificially raise rents and concealed their conspiracy from the public. By providing highly detailed, sensitive, non-public leasing data with RealPage, the defendant landlords departed from normal competitive behavior and engaged in a price-fixing conspiracy. RealPage then used its revenue management algorithm to illegally set prices for all participants.
- RealPage’s conspiracy with the landlord co-defendants violates both the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act. Arizona’s antitrust law prohibits conspiracies in restraint of trade and attempts to establish monopolies to control or fix prices. The State’s consumer-fraud statute makes it unlawful for companies to engage in deceptive or unfair acts or practices or to conceal or suppress material facts in connection with a sale, in this case apartment leases.
- The illegal practices of the defendants led to artificially inflated rental prices and caused Phoenix and Tucson-area residents to pay millions of dollars more in rent. Defendants conspired to enrich themselves during a period when inflation was at historic highs and Arizona renters struggled to keep up with massive rent increases.
The landlords named in the lawsuit are: Apartment Management Consultants, L.L.C., Avenue5 Residential, L.L.C., BH Management Services, L.L.C., Camden Property Trust, Crow Holdings, L.P./Trammell Crow Residential, Greystar Management Services, L.P., HSL Properties, Inc., RPM Living, L.L.C., and Weidner Property Management, L.L.C.
One of the companies named in the lawsuit, Apartment Management Consultants, is denying these claims. They say of the 85 properties they own in Arizona, only one uses the software, according to Azfamily.com.
State officials say such pricing methods violate the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act. The law states that entities cannot establish monopolies to control or fix prices. In 2023, ProPublica revealed that the RealPage software used algorithms to maximize profits, which experts stated could violate antitrust laws.
After the ProPublica report the Department of Justice filed a statement in support of tenants. “Algorithms are the new frontier,” federal prosecutors said in their filing. “And, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”
RealPage has said it “strongly denies the allegations and will vigorously defend against the lawsuit.”
