Makers of Rent-Setting Software Sue California City Over Ban (apnews.com) 79
Berkeley, California is "the latest city to try to block landlords from using algorithms when deciding rents," reports the Associated Press (noting that officials in many cities claim the practice is driving up the price of housing).
But then real estate software company RealPage filed a federal lawsuit against Berkeley on Wednesday: Texas-based RealPage said Berkeley's ordinance, which goes into effect this month, violates the company's free speech rights and is the result of an "intentional campaign of misinformation and often-repeated false claims" about its products.
The U.S. Department of Justice sued Realpage in August under former President Joe Biden, saying its algorithm combines confidential information from each real estate management company in ways that enable landlords to align prices and avoid competition that would otherwise push down rents. That amounts to cartel-like illegal price collusion, prosecutors said. RealPage's clients include huge landlords who collectively oversee millions of units across the U.S. In the lawsuit, the Department of Justice pointed to RealPage executives' own words about how their product maximizes prices for landlords. One executive said, "There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down."
San Francisco, Philadelphia and Minneapolis have since passed ordinances restricting landlords from using rental algorithms. The Department of Justice case remains ongoing, as do lawsuits against RealPage brought by tenants and the attorneys general of Arizona and Washington, D.C...
[On a conference call, RealPage attorney Stephen Weissman told reporters] RealPage officials were never given an opportunity to present their arguments to the Berkeley City Council before the ordinance was passed and said the company is considering legal action against other cities that have passed similar policies, including San Francisco.
RealPage blames high rents not on the software they make, but on a lack of housing supply...
But then real estate software company RealPage filed a federal lawsuit against Berkeley on Wednesday: Texas-based RealPage said Berkeley's ordinance, which goes into effect this month, violates the company's free speech rights and is the result of an "intentional campaign of misinformation and often-repeated false claims" about its products.
The U.S. Department of Justice sued Realpage in August under former President Joe Biden, saying its algorithm combines confidential information from each real estate management company in ways that enable landlords to align prices and avoid competition that would otherwise push down rents. That amounts to cartel-like illegal price collusion, prosecutors said. RealPage's clients include huge landlords who collectively oversee millions of units across the U.S. In the lawsuit, the Department of Justice pointed to RealPage executives' own words about how their product maximizes prices for landlords. One executive said, "There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down."
San Francisco, Philadelphia and Minneapolis have since passed ordinances restricting landlords from using rental algorithms. The Department of Justice case remains ongoing, as do lawsuits against RealPage brought by tenants and the attorneys general of Arizona and Washington, D.C...
[On a conference call, RealPage attorney Stephen Weissman told reporters] RealPage officials were never given an opportunity to present their arguments to the Berkeley City Council before the ordinance was passed and said the company is considering legal action against other cities that have passed similar policies, including San Francisco.
RealPage blames high rents not on the software they make, but on a lack of housing supply...
Say it aint so! (Score:3, Informative)
The People's Republic of Berkeley is biased against a company that sells rent-gouging-as-a-service?
I'm Shocked! Shocked I Say!
...well, not that shocked.
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Is that a pejorative to you?
It is a name the city uses to describe itself. It is emblematic of the politics: "of, by, and for the people". It is the name on (some of) the signs in town.
When we want to make fun of the place, we call it Berserkly -cause they are all crazy there.
Foreign trolls just don't understand...
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I’m a native English speaker and don’t have the faintest clue about the pseudo intellectual word salad you’re spewing.
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I'm a "foreign troll" and I unserstood the word salad. You sure you just don't reach the intellectual level necessary to understand it?
And no, this isn't flamebait. I think people on the internet should stop operating from the premise that they're superior to everyone whose post they don't like.
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I think people on the internet should stop operating from the premise that they're superior to everyone whose post they don't like.
You do understand you're a defending a person that just denigrated an entire city of people? Isn't that the definition of being superior to people they don't like?
Re:Say it aint so! (Score:5, Informative)
Multiple cities have accused RealPage of facilitating price fixing.
There are long-standing laws on the books against price-fixing enforced by the Federal Trade Commission and antitrust and competition laws enforced by the Department of Justice..
This is pretty clear-cut facilitation of anti-consumer, anti-competitive corporate collusion.
If there is any bias to be had in this it is bias against a competitive marketplace and for tools facilitating businesses to gang up against individual renters.
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San Francisco, Philadelphia and Minneapolis have since passed ordinances restricting landlords from using rental algorithms. The Department of Justice case remains ongoing, as do lawsuits against RealPage brought by tenants and the attorneys general of Arizona and Washington, D.C...
What exactly is your problem with this? I just proved you should have no problem with this and you're a hypocrite?
I'm Shocked! Shocked I Say! ...well, not that shocked.
Anything's possible with the Trump administration (Score:3, Insightful)
I know most people around here bought houses when they were cheap and heavily subsidized by the government so you think it's a okay and you don't much care. This will bite you in the ass too. You can't keep sucking every single penny out of the economy for everyone but yourself and not suffer some consequences and that rental property you bought 15 years ago does not make you a member of the elite.
They will use the medical system to suck your money dry, and then take your property. That's their plan. That and tariffs and other forms of national sales tax. At the end of the day you're still going to spend the bulk of your income not on buying up companies and property but on just day-to-day living. And They will use that too.
I'm not saying this because I think anyone reading it will believe that. I'm just screaming into the void at this point. I don't think we have any chance left. The people who should be securing our rights or bickering too much to do anything about it and leaving a power vacuum so that the 0.1% can devour us all. I think America is finished. I think the whole civilization is finished with it. I'd love to be proven wrong but so far everything's on track for a worst case scenario.
But hey I'm a lib, and you guys sure owned me. Have fun without your heart medication in a few years.
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Capitalism without competition is just fascism.
Feudalism pre-dates capitalism. In many ways this is much closer to feudalism. You have mad king Donald and his court hands out favours to the special companies that kiss his ring. This court case is likely to be decided based on Donald's intervention, either to support "free speech" for computers or to (unlikely, almost impossble) actually support the anti-trust laws.
Even the free speech discussion here is feudalism. You cannot have free speech for both computers and people because the computers can go inf
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None of which have anything to do with how states govern and regulate rental markets, you fucking lunatic.
Did you read the headline but not the summary? Quoting the summary above:
The article we're discussing is not only about states.
So Trump can't stop every investigation (Score:2, Interesting)
And yes I was a well aware that Biden was investigating this. It was one of the many many many reasons I desperately hoped he or Kamala was going to win. But of course Americans can't do sensible things and even when we try billionaires will cock block us using voter suppression. 3.5 mill
Re: Anything's possible with the Trump administrat (Score:2)
The DoJ *was* investigating them. And Realpage sued Berkeley in *federal* court. Bozo.
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None of which have anything to do with how states govern and regulate rental markets, you fucking lunatic.
Umm...:
This software is crystal clear in illegal antitrust violation.
It's right there in the first line. You're free to disagree with it, but it very clearly has to do with how states govern and regulate rental markets.
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Musk is the biggest welfare queen on the planet, nearly every business he has been involved with has gotten money from the government, and now he wants to kick away the ladder for anyone else. Fuck that apartheid nepo-baby
https://futurism.com/elon-musk... [futurism.com]
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The DOJ lawsuit against RealP [justice.gov]
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Don't worry I believe you.
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This is not Trump, no matter how much you hate him. Companies have been using software to gouge prices before he got into power, for example dynamic ticket pricing, in my day it was called scalping and was frowned upon, but now the people who have total monopoly on ticket sales are doing it its just them optimizing their profit.
Amazon engaged in price discrimination for some customers in the year 2000, showing different prices at the same time for the same item to different customers, potentially violating the Robinson–Patman ActWhen this incident was criticised, Amazon issued a public apology with refunds to almost 7000 customers but did not cease the practice.
https://en.wikipedia.org/wiki/... [wikipedia.org]
The entire system is broken, and the main use of the internet has become to screw consumer for every penny they can. We have a system that is based
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It took me just two sentences to make me go look at the username and lo and behold, it's rsilvergun.
Basically (Score:2, Funny)
setup-cartel.exe
RealPage is CaaS (Score:5, Insightful)
RealPage is Collusion as a Service(CaaS).
They cannot prove otherwise.
Re:RealPage is CaaS (Score:5, Insightful)
RealPage is Collusion as a Service(CaaS).
They cannot prove otherwise.
They don't have to. It's the ones making the assertion that have to prove their assertion.
Re:RealPage is CaaS (Score:5, Informative)
True.
Fact: RealPage has information on rents from the landlords that use its service.
What RealPage has said about its service [justice.gov]:
__________________
1. [...] In its own words, RealPage “helps curb [landlords’] instincts to respond to down-market conditions by either
dramatically lowering price or by holding price when they are losing velocity and/or
occupancy. . . . Our tool [] ensures that [landlords] are driving every possible
opportunity to increase price even in the most downward trending or unexpected
conditions” (emphases added).
2. In fact, as RealPage’s Vice President of Revenue Management Advisory
Services described, “there is greater good in everybody succeeding versus essentially
trying to compete against one another in a way that actually keeps the entire industry
down” (emphasis added). As he put it, if enough landlords used RealPage’s software,
they would “likely move in unison versus against each other” (emphasis added). To
RealPage, the “greater good” is served by ensuring that otherwise competing landlords
rob Americans of the fruits of competition—lower rental prices, better leasing terms,
more concessions. At the same time, the landlords enjoy the benefits of coordinated
pricing among competitors.
__________________
The updated DOJ complaint against RealPage is here. [justice.gov]
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Fortunately this is easy to prove: Rents go up when occupancy goes down in cities where landlords use RealPage which is pretty clear evidence of the CaaS model. RealPage-using landlords do not compete, they make more money on each occupied unit choosing to leave units empty to keep rents high. If they do not follow RealPage's pricing suggestions, they are kicked out of the collusion club. The very fact that the s
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That's exactly what I was thinking. It's an interesting angle, making money off helping landlords collude to make more money. It's basically a mechanism to eliminate the (consumer's) benefit of free-market pricing.
So I suppose it might also be classified as racketeering? [wikipedia.org] Or you could say that it creates/operates a Trust? [wikipedia.org]
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It's basically a mechanism to eliminate the (consumer's) benefit of free-market pricing.
Actually, what landlords are trying to do is "free market pricing". Cartels happen automatically when the business "self-regulates".
What the consumers want is competitive market pricing, which is why the government is involved. Someone needs to level the playing field.
"Free market" is a cartel or an oligopoly. A competitive market is a non-free, regulated market.
Learn the difference.
When algorithms are outlawed... (Score:2, Insightful)
Algorithm (Score:2)
Re:Algorithm (Score:4, Insightful)
" Are humans allowed to use the same algorithm?"
That really ignores the whole price-setting collusion part, doesn't it?
"We all used the same algo and it told us all to raise prices at the same time, aw shucks"
Re:Algorithm (Score:5, Informative)
This is what I was going to post. Are humans allowed to use the same algorithm? How are rents supposed to be set? Rolling dice?
The issue is RealPage allows landlords to collude with one another to set prices. For example, if a one bedroom in the city goes for $2,000/month, a one bedroom in the suburbs can also go for $2,000/month even though the two are in distinctly different areas.
The same with any extra fees such as paying month by month rather than having a yearly lease.
You can read the Justice Department's complaint here [justice.gov] where they outline the collusion of RealPage.
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How can this company still be in business and its CEO not in jail?
No, Humans would not be permitted. (Score:2)
Because that algorithm involves information that two competitors would not have - everyone's individual costs, occupancy rates, all the rents they are charging, what offers they are making.
And a pricing algorithm of "I'll charge the same amount you are charging" is strictly illegal. And although the software was more complex than that, it boils down to the same thing - using computers to ensure that landlords are not competing, so that rents can be as high as possible. That's anti-competitive.
Re:Algorithm (Score:5, Informative)
1 The landlords get together over meal, negotiate prices: "I want to charge at least $2000/month for a one-bedroom..."
2 The landlords all call "Vinnie" for pricing advice: "Hey Vinnie, what's the going rate for a one-bedroom?..." Vinnie knows what everyone else is charging, so the landlords all ask the same rent.
3 Replace Vinnie with Vinnie-5000, basically a bot that suggests rents: "VINNIE-5000 recommends you charge $2000 for a one-bedroom."
All three scenarios are examples of collusion. The fact that we replaced person-to-person negotiation with a machine doesn't change the collusion part.
Before RealPage, standard practice for big landlords was to try to keep all their units rented as much as possible, discounting rents as necessary to get or keep tenants. RealPage takes the opposite tack: RP advises landlords what to charge, and RP advises landlords to stay firm on rents: no discounts. Existing long-term (e.g. desirable) tenants get the the same rent increases as a just-vacated unit. Result: renters see the same pricing everywhere, because the landlords are colluding. Existing tenants outraged by a rent increase won't leave, because they can't find a better deal anywhere else. Over time, rents are ratcheted up, and landlords make more $$$.
Here's yet another way to look at it: Why would all the big landlords in a given city agree to pay RP for "advice" about rents? Could it be that landlords make more $$$ using RP?
Re:When algorithms are outlawed... (Score:5, Informative)
Here's the thing: every business decision is an algorithm, whether implemented by a human or by a computer
The ban is on the sale or use of algorithmic devices to set rent prices or manage vacancies as defined
RECOMMENDATION
Adopt an ordinance amending the Municipal Code adding section 13.63 to prohibit the
sale or use of algorithmic devices to set rents or manage occupancy levels for
residential dwelling units.
The ordinance would have a positive financial impact on the city’s tenants as there is
documented evidence that use of these algorithmic devices has led to year-over-year
rent increases of 5%-12% across housing markets. A prohibition on the sale and use of
these devices will lead to reduced rents and elimination of artificial scarcity.
CURRENT SITUATION AND ITS EFFECTS
The proposed ordinance is provided as Attachment 1. Attachment 2 is a PowerPoint
presentation regarding the proposed ordinance provided to the Housing Advisory
Commission (HAC) at its October 10, 2024 meeting. A new type of rental software
(often referred to as algorithmic devices) is increasing rents and vacancy rates by
allowing large landlords to collude on pricing decisions. Third-party revenue
management companies collect and combine proprietary large landlord data and make
pricing and occupancy recommendations. These recommendations allow landlords to
manipulate the market and the practice amounts to illegal price-fixing.
The use of
algorithmic devices in setting rents and occupancy levels contributes to double-digit rent
increases, increased rates of eviction, and artificial housing scarcity. Lee Hepner, an
antitrust attorney at the American Economic Liberties Project, states that “widespread
use of price fixing software presents a new front in the housing affordability crisis.”
While numerous lawsuits have been filed to prohibit such antitrust activities, these
cases may take years to resolve. This ordinance prohibits the sale or use of algorithmic
devices for the purpose of setting rents to bring immediate relief to Berkeley tenants, as
well as to put landlords who have been using these devices on equal footing with those
who are willing to adhere to fair standards for setting rental rates.
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Instead of outlawing algorithms, how about outlawing predatory pricing and price gouging?
I think the key thing to outlaw here is price-fixing. If sellers are making back-room deals with each other so that they all charge the same rates so they don't have to compete on price, you don't have a free market anymore, you have an oligopoly. That they are doing that via a web site is just an implementation detail.
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Instead of outlawing algorithms, how about outlawing predatory pricing and price gouging?
Price fixing through collusion is, in fact, outlawed. The algorithm in question is just a way of laundering collusion.
A lot of things should be illegal (Score:3)
Going after so-called predatory pricing without a standard for what breaks the threshold of predatory is a meaningless gesture that doesn't stop the problem. Now attorneys are going to argue back and forth on the Berkeley's exact statute. But the principle remains, regardless of the court's ruling. That if you suck up a bunch of private data on rental rates, create a clearing house, then turn that data into a number that you sell back to the original source that gave you the data. You have a loop that creat
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Instead of outlawing algorithms, how about outlawing predatory pricing and price gouging?
That is precisely what California is doing, and is the entire purpose of the new law. This sleazy company is trying to become the very type of trust that antitrust was created to fight. California is fighting it, and this sleazy company is complaining that its illegal behavior is being smacked down in multiple jurisdictions.
It's a bit like if you were to create a company whose sole purpose was to systematically break windows for your window replacement company that is the sole company that can replace windo
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Here's the thing: every business decision is an algorithm, whether implemented by a human or by a computer. Instead of outlawing algorithms, how about outlawing predatory pricing and price gouging?
No one is talking about outlawing algorithms. They are talking about outlawing collective price setting of competing businesses algorithmically. Because fun fact: market collusion is illegal.
FIRST AMENDMENT (Score:3, Informative)
The First Amendment to the Constitution of the United States prevents the government from abridging freedom of speech BUT IT HAS LIMITS and some of those have to do with "conspiracies" to violate the laws. That means if I own a gas station and you own a gas station and we get together for drinks and "just discuss" how those rates could just go up to $4,00/gallon tomorrow at 0800, well then, does the government have the legal right to stop us from having that discussion?
No, it doesn't. But if we ACT on that discussion and at 0800 tomorrow we raise our per-gallon prices to $4.00 then our simple conversation became a conspiracy to collude to fix pricing in contravention of antitrust regulation preventing a free market competition. (Yes, I know Trump Tariffs mess with all that free market stuff, but he's like the head moron so he does what he wants. You and I still don't get to collude on pricing.)
So the City of Berkeley is saying that this company can publish whatever they like, and have their software issue "recommendations" but if all the landlords who use their service conspire to collude to set anti-competitive pricing, that's against the law.
There's no first amendment issue here, just greedy fat pigs.
I am not a lawyer and we have no business relationship and this is my opinion.
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This is pretty much correct since the law cares about intention aka mens rea, it's a very important aspect of our legal system, the difference between manslaughter and murder and then murder in the 2nd versus murder in the 1st; what was the state of mind of the accused, what were they intending to do.
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This isn't a criminal case.
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If it's not criminal it's not legal?
What do you think a conspiracy versus a non-conspiracy is besides state of mind?
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Are you an attorney? I am not.
Check here:
https://www.schmidtandclark.co... [schmidtandclark.com]
Then here:
https://www.jstor.org/stable/2... [jstor.org]
"The key to explaining the relatively minor role of mens rea in tort law is found to lie in the emphasis tort law gives to the interests of victims, and to social values, in constructing its concept of responsibility. This approach also helps to explain the greater importance of mens rea in criminal law."
This is a lawsuit, a tort. They are fighting the ban, the ban is because of the reality o
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What are the landlords accused of? How do you prove collusion versus coicidence?
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Landlords are not accused of anything and are not a party in the lawsuit discussed here. No one has to prove or disprove a crime, the case is about a ban on software. The software company that makes the ban software is suing to remove the ban. A tort is not a criminal case, what you have to prove and how much proof you need is different, the remedies are different. This case is more about the public good, it seems the city believes that this software is not serving the public good but is harmful. We'll see
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Criminality and criminal intent are also important in civil cases but then decided to different standards. You cannot profit from crimes so you can be sued in a civil case for price fixing. The nice thing is that it's then easier to show the price fixing because you don't have to "prove" it beyond reasonable doubt. You just have to show that it's likely happening on the balance of probabilities (even in the face of any opposing evidence the other side puts up, of course).
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The First Amendment to the Constitution of the United States prevents the government from abridging freedom of speech BUT IT HAS LIMITS and some of those have to do with "conspiracies" to violate the laws
Also the law does not forbid or impede speech. It prohibits purchasing or consulting an algorithmic device to make decisions about refusing to rent something out or setting the price you will rent the thing out. Based on competitor non-public data.
It seems like it would be perfectly legal to sell or p
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TFS: the Department of Justice pointed to RealPage executives' own words about how their product maximizes prices for landlords. One executive said, "There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down."
RealPage used its First Amendment rights to say the above.
It *should* have used it's Fifth Amendment rights to keep its mouth shut.
Who needs algorithms? (Score:2)
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That only works when companies want to bid for the good employees and skip over the bad ones. In some jurisdictions, it is illegal to use credit scores, criminal convictions or other past behavior as a basis for qualification for rental.
So in the case of housing, it all boils down to a flat rate offered to all tenants. Regardless of whether they will take care of or trash their unit and skip out on the rent.
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Oh fuck off you idiots. (Score:2)
Nobody is going to subscribe to your software to make LESS money.
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In principle they could make more money by having a lower rent which would lead to higher occupancy. This is wrong, of course, because if you try to charge too high a rent the market tells you that immediately by people seeing the room and then deciding to go elsewhere. They'll try to make that argument, of course.
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Start with 2x what you want and let tenants talk you down. They'll think they got a great deal and everybody is happy. No lame software necessary, just basic social skills. Ahhh.. that's the problem. Landlords are fucking slugs and don't have social skills, it's potentially an ADA qualifying disability. They may have a legal need for RealPage after all.
Are they banning the wrong thing? (Score:2)
The issue in this case seems to be sharing non-public data between landlords with the purpose of determining prices, which is antitrust collusion. Perhaps what we need to explicitly ban is using this non-public information in any algorithms, rather
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"We we ban algorithms"
-1, illiterate
Who is banning algorithms? This law does not ban algorithms.
It bans price fixing that uses an algorithm to hide the fact that it's price fixing.
Why do you hate free markets so much?
Screw them all! (Score:2)
Screw RealPage, Entrata, and AppFolio. They know that their software is perfectly capable of analyzing the real estate market and price such that other algorithmic AIs will price accordingly. RealPage et al hope that now that the Real Estate Loser in chief has become president again they can get the DoJ to drop cases, and will intimidate Berkeley and other cities into dropping or not implementing similar ordinances.
When Trump said America was heading into a new golden age, he was referring to go back to the
Not free speech (Score:1)
First, a business doesn't have a right to free speech. Second, I don't see a problem with your web-site telling all consumers the recommended price for each suburb: That's what you mean by "free" right: Information given to everyone, without additional cost? (Both meanings of "free" are applied to your service.)
Then landlords don't need your software/services, they'll instantly be mega-rich from government refusing to build more suburbs. Now, it's sounds like the landlords are victims and the governmen
Using AI to control people. Think of the future (Score:2)
So Realpage is controlling the lives of every renter.
AI is controlling people!
This will be the first legal test of AI controlling people. It could have long lasting effects,
Do we allow AI to control peoples lives?
Company's right to free speech? (Score:2)
They have no such right. That's a right given to people, not companies.
If companies had such rights, there could be no Truth in Advertising laws. You'd have to just believe whatever a company claimed their product did, or if the product was even in the box they sold you.
Did we say it was vegan and gluten free? Free speech! Never mind the people that die because of anaphylaxis from shellfish allergies or celiacs having GI issues for days.
I'm not sure if this came out as a defense for the oil companies to
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They have no such right. That's a right given to people, not companies.
If companies had such rights, there could be no Truth in Advertising laws. You'd have to just believe whatever a company claimed their product did, or if the product was even in the box they sold you.
That doesn't really logically follow. There are plenty of laws that restrict individual people's free speech. It's illegal to harass someone by repeatedly calling them, especially at 2:00 AM. It's illegal to threaten to kill someone. It's illegal to lie in court.
Um ... (Score:2)
... algorithms are just procedures. Chains of logic.
They can be implemented by software, or they can be executed manually.
So this is more or less equivalent to claiming that your patent idea is novel because "... using a computer" or "... on the internet". These algorithms are now evil "because implemented in a computer program".
It also implies that somehow, the state magically knows what the rents "should be".