U.S. property management giant Greystar has reached a $7 million settlement with nine states that sued it for using rent-setting algorithms which officials claim have driven up housing costs.
The settlement was filed on Tuesday in a North Carolina federal court.
This is the latest result from antitrust lawsuits targeting RealPage and similar software companies. Prosecutors state that the products help rival property managers illegally align prices and push up rents. A judge must still approve the deal.
The plaintiffs allege that Greystar used RealPage software to inflate rental prices. The lawsuit states property managers shared confidential business information with the software platform, coordinating on pricing in violation of antitrust law.
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“Whether it’s through smoke-filled backroom deals or through an algorithm on your computer screen, colluding to drive up prices is illegal,” Democratic California Attorney General Rob Bonta said in a news release. “Families across the country are staring down an affordability crisis. Companies that intentionally fuel this unaffordability by raising prices to line their own pockets can be sure I will use the full force of my office to hold them accountable.”
Greystar will also no longer use software that relies on other landlords’ confidential data to set rents, as part of the settlement. The company also separately agreed last month to pay $50 million to settle a class-action lawsuit over its use of RealPage. Greystar also reached a nonmonetary agreement with the Department of Justice to halt similar practices in August.
“We are pleased this matter is resolved and remain focused on serving our residents and clients,” Greystar said in a statement Wednesday.
Greystar, which is based in South Carolina, manages more than 946,000 units nationwide, according to the National Multifamily Housing Council. RealPage, which is based in Texas, has said its software is used on fewer than 10% of rental units in the U.S., and that its price recommendations are used less than half the time. It did not have a comment on the latest settlement.
“RealPage does not anticipate needing to make any changes to its revenue management software for customers to continue using the products pursuant to any terms in these settlements,” RealPage said in a statement. The company said that the plaintiffs misunderstand how their product works. It argues that the real driver of high rents is a lack of housing supply, and says its pricing recommendations often encourage landlords to drop rents since they are incentivized to maximize revenue by maintaining high occupancy.
The states that are part of the settlement include California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon and Tennessee.