San Francisco Adopts Ordinance To Ban AI Rent Pricing Tools

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San Francisco has become the first city to adopt an ordinance banning the use of artificial intelligence software to set rental rates

San Francisco has become the first city in the nation to adopt an ordinance to ban the use of artificial intelligence software to set rental rates, according to reports.

The Board of Supervisors has unanimously adopted an ordinance blocking the use and sale of artificial intelligence tools that allegedly enable price fixing by large corporate landlords.

“Banning algorithmic price gouging is pro-housing policy,” Supervisor Aaron Peskin said at a recent board meeting. “Let’s build housing for renters, not for real estate investors,” according to NBCbayarea.com.

The rent pricing tools legislation will go before the board for final approval on Sept. 3.

Peskin said he hopes the legislation will be a model for other local governments around the country, comparing the urgency around the ordinance to the city’s early regulation of Airbnb.

The city’s ordinance comes as the U.S. Department of Justice is investigating RealPage, a revenue management company whose software is used by landlords to maximize rents. Attorney generals across the country have filed lawsuits alleging RealPage’s tools empower collusion and price-gouging among large corporate property owners, KQED reported.

Peskin, who introduced the legislation, said. “Wall Street has gotten into the housing business, and it’s a phenomenon we have seen here locally.” He said banning the software is “entirely consistent with our shared goal of a functioning housing market that meets our real housing needs.”

Tens of thousands of units in San Francisco are estimated to be owned by companies that use artificial intelligence software technology, according to Lee Hepner, senior legal counsel at the American Economic Liberties Project.

“Landlords, who should be ordinarily competing against each other, are instead adopting the price recommendations of this third-party revenue management software. And the effect of that is an old-fashioned price-fixing scheme,” Hepner told KQED. “It is not unlike the kind of price fixing that antitrust laws have addressed for well over a century.”

RealPage says the claims about the artificial intelligence software are false and housing affordability should be the focus.

“The time is now to address a number of false claims about RealPage’s revenue management software, and how rental housing providers operate when setting rent prices,” Dana Jones, RealPage CEO and President said in a statement. “Housing affordability should be the real focus. RealPage is proud of the role our customers play in providing safe and affordable housing to millions of people. Despite the noise, we will continue to innovate with confidence and make sure our solutions continue to benefit residents and housing providers, alike.”