RealPage Is Under Fire For Its Rent Algorithm — But A GOP Tax Plan Could Protect The Company From Lawsuits And Local Bans

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RealPage, the Texas-based software company embroiled in a firestorm of controversy and legal struggles due to its algorithmic rental price setting, may have found an escape in its fight against state and local governments. The company has the latest GOP tax bill to thank for its possible lifeline.
The bill, which passed the House on May 22, would hinder local and statewide efforts to ban algorithmic price-setting software, including RealPage and Yardi Systems, due to a provision that allows artificial intelligence-based decisions to prevail for 10 years. However, the bill would not prevent the civil lawsuit against RealPage brought by the Department of Justice from continuing.
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Several U.S. cities, including San Francisco, Philadelphia, Providence, Rhode Island, and most recently, Jersey City, New Jersey, have implemented bans on the software, with several other cities on the verge of doing so, the Journal reports.
The cities allege that RealPage and others help landlords engage in illegal collusion to ensure rental prices continue to rise by collecting and analyzing confidential data and using it against residents. Should the bill pass Congress, all that could change. "We would no longer be able to enforce this ban," Providence City Council President Rachel Miller told the Journal.
Local governments would not take the new law lying down should it pass. Suing the federal government as a first retaliatory measure, Miller told the Journal. Secondly, they would lean on tenant-protection laws.
"Rent control—that would be the biggest tool if folks are using algorithms to jack up rents," Jersey City Councilman James Solomon, who was recently successful in banning RealPage in his city, told the Journal.
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RealPage is fighting back against the bans, suing Berkeley, California, over its ban. Meanwhile, landlord advocacy trade groups, such as the National Multifamily Housing Council, have intensified their lobbying efforts, arguing that the housing shortage, rather than algorithmic pricing, is the primary reason for rent increases.
It has also reiterated RealPage's defense that landlords can refuse to follow RealPage's recommendations and set their own rental prices, and that large landlords do not contribute to the majority of rental units in the U.S. Rather, mom-and-pop landlords who do not use RealPage offer the majority of rentals.
However, NMHC staff and others contributed suggestions to a House Financial Services Committee that shaped the current AI component in the GOP tax bill, according to The Wall Street Journal. "At a time when housing providers face increasing pressure to meet booming demand, tax policy should not stand in the way. Indeed, tax policy should lead the way," NMHC President Sharon Wilson Géno said in a letter of support sent to the chairman of the panel that added the provision to the new tax bill, the Journal reported.RealPage has already suffered a reputation loss and the loss of potential business from landlords who have backed away from using it after the Atlanta offices of multifamily company Cortland were raided by the FBI last year as part of the DOJ investigation. Cortland ended up settling with North Carolina Attorney General Jeff Jackson, the only management company to have done so.
"Everybody that I know has stopped using RealPage just out of sheer terror," Tony Julianelle, chief executive at real-estate brokerage Atlas Real Estate, told the Journal.
RealPage has a lot to lose — $73 billion, according to the Journal, should it be unsuccessful in the lawsuits it is facing. Additionally, it would face significant restrictions on how its revenue management software is used. However, Congress could change the narrative should it diminish the influence of local and state lawmakers in their fight against RealPage, taking the wind out of the sails of the larger opposition.
"It's not a get-out-of-jail-free card," Kevin Weller, a New Jersey tenant who filed one of the largest class-action lawsuits against RealPage, told the Journal "But it could muddy the waters."
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This article RealPage Is Under Fire For Its Rent Algorithm — But A GOP Tax Plan Could Protect The Company From Lawsuits And Local Bans originally appeared on Benzinga.com