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Lawsuit filed against rent-setting software RealPage

178 points by carride 4y ago

arthurofbabylon 4y ago
This is the tip of the iceberg and has huge implications – for corporate power, competition, inflation, consumer spending power, quality of life. Monopolies and cartels are ubiquitous in the American business landscape. They aren’t highly visible, as they operate in the operational layers between stages of industry: rental unit pricing (as highlighted in this story), niche goods distribution, other services. They aren’t the classic top-down monopolies observers expect to see, yet they have the same impacts of exploiting their peripheries, eliminating competition, crippling innovation, and inducing inflation. I believe eliminating cartels and monopolies is the single greatest economic opportunity presented to the US.
- landemva 4y ago
  Cartel busting is about the only way to fix the enormity of government payments for Medicaid and Medicare. If not, then the federal spending will collapse something.
advisedwang 4y ago
Sometimes I feel like propublica is the only meaningful journalism going on. I listen to several podcasts and it feels like about 1/3 of them are re-telling the story of a propublica article.
- boringg 4y ago
  They probably took the work that propublica did and packaged into news bytes.
advisedwang 4y ago
The same thing is happening with salaries. Most HR departments set salaries based on "market reference points" derived from data from salary survey companies like erieri.com. But the HR depts also send their salary data to the salary survey companies (that is how they get a lot of their data). The result is all the companies in an industry are basically pooling their salary decisions and then carefully sticking close to what the others are paying. If the companies did this directly, it would 100% be wage-fixing. But somehow laundering it through an intermediate makes it legal.
- pevey 4y ago
  > But somehow laundering it through an intermediate makes it legal. It probably is illegal. This case with rents will be very interesting to watch. In the insurance industry, a special law (McCarran-Ferguson Act) had to be passed to allow companies to pool loss data to set rates. Otherwise, it was seen as an anti-trust violation. The law was passed because the public interest in making sure insurance companies are solvent and can pay claims outweighed the anti-trust issue. I think these tools are on very shaky legal ground.
- preston4tw 4y ago
  IANAL but wouldn't a judge look at that and just say it's wage fixing with extra steps?
  - landemva 4y ago
    State attorney general could get it to a court and stopped, but apartment renters aren't in the political class so not a priority.
  - dendrite9 4y ago
    CaaS, Collusion as a Service? This certainly seems like one of those cases worth watching.
    - Red_Leaves_Flyy 4y ago
      I think you mean Crime as a Service. Uber, Google, Amazon, eBay, PayPal, Instagram, TikTok, Facebook, Telegram, Reddit, etc all profit from crime. Companies facilitating collusion with a wink and a nod are the next logical progression of legitimizing white collar criminals. Police and prosecutors have spent ages chasing their tails with a self reinforcing drug war while mr burns types have been building infrastructure to brazenly fleece the public in broad daylight for decades. It’s time for major investment in dismantling white collar crimes outfits, like apartment price fixing, realtor corruption, wage fixing, wage theft, and the obscene culture of flouting workplace safety standards in virtually every industry.
- 4y ago
prpl 4y ago
On some reflection, I don’t understand how this app ever makes it around those regulations in a form where it’s largest users can factor in advertised and actual rent prices to their prices, especially in a world of consolidation, where these companies strive to own or manage most properties in big cities.
- dd82 4y ago
  one bigger opinion I have is I really hope the engineers and people at this company get screwed royally by their product in the coming years. Since they're doing an excellent job of screwing people.
  - ROTMetro 4y ago
    This. I am a garbage human being and even I pass on working on 'solutions' that just make the world a worse place.
- treis 4y ago
  It's one of those things that's such an obviously bad idea that it should be illegal regardless of the consequences. That said, I'm pretty dubious that this sort of sharing has had much of an impact. Prices at big apartment complexes aren't exactly secret. You lose some fidelity due to negotiated discounts/concessions and you lose exact occupancy information. But the publicly available information is good enough to use as comps.
buscoquadnary 4y ago
Trust busting trust busting trust busting trust busting trust busting
- such12 4y ago
- pwinnski 4y ago
  Indeed, RealPage is an acquisitive beast. Their Wikipedia page[0], as I write this, is largely a list of companies they've acquired. I know a lot of HN posters live in hope of developing something that will be acquired by a FAANG, but corporate acquisitions are usually bad for everyone but the person running the company being acquired. 0. https://en.wikipedia.org/wiki/RealPage https://en.wikipedia.org/wiki/RealPage
dang 4y ago
Recent and related: Rent going up? One company’s algorithm could be why - https://news.ycombinator.com/item?id=33224502 https://news.ycombinator.com/item?id=33224502 - Oct 2022 (279 comments) I think there were other threads also?
- takoid 4y ago
  Here’s another from around 11 hours ago (only 6 comments): https://news.ycombinator.com/item?id=33313028 https://news.ycombinator.com/item?id=33313028
- carride 4y ago
  Yes, that discussion was based off Propublicas article reporting about the problem. The following days the lawsuit was filed which is the propublica is reporting on here.
kazinator 4y ago
> uses aggregated market data from a variety of sources in a legally compliant manner That will be interesting. If they are thinking that "legally compliant manner" is rooted in nothing more than having permission to the data (for instance, because users of their software sign off on it in the licensing agreement), they may be in for a surprise.
AlbertCory 4y ago
The title "rent-seeking" is deceptive. I'd call it "clickbait" but my preferred term "illegal collusion" also draws clicks and is more accurate. Sharing your own negotiated prices may or may not be legal, but it's often bad manners at the very least and damages your business relationships. My submission today "Culture at Google: Part One, the Movies" deliberately does not say how much I paid for PPRs, because I was asked not to tell other distributors that.
- braingenious 4y ago
  The title is “rent-setting” not “rent-seeking.” This is accurate because the software is literally used to set rental prices.
  - AlbertCory 4y ago
    Oops. You're right. Sorry.
emptyparadise 4y ago
we could've used computers for good but instead we're telling them to commit illegal price-fixing collusion
ZoomerCretin 4y ago
If all the landlords in an area use this and discover that the real market rate for rent is double, what is different from them doing this independent of each other and independent of this software? Does this not simply enable price discovery to occur at a faster pace?
- evancox100 4y ago
  The difference is whether or not they colluded with their supposed competitors to set rents twice as high.
  - ZoomerCretin 4y ago
    Doesn't that require a monopoly or an oligopoly among the competitors to exist? What does it matter if 10 landlords collude to double rents if they only control 10% of the rental market?
    - longtimelistnr 4y ago
      Wouldn’t it matter if that 10% was in a concentrated area? As in whole neighborhoods?
encryptluks2 4y ago
Corporations being this brazen are not going to go away by one lawsuit. These companies are smart enough to protect their interests even if you take down the company. They'll just rebrand. People with money rarely see any real consequences. Just a small slap on the wrist and they just get smarter and more creative in ways to get away with this stuff.
constantcrying 4y ago
ranrotx 4y ago
It’s also not so much about RealPage, but the consolidation that has occurred in rental property ownership and management over the years. Now take what RealPage is doing with apartments and imagine if every major airline used the same revenue management solution (most use their own which are proprietary) to set airline fares. I hope RealPage (and these investor-owned apartment owners) pay dearly for this. Imagine what the size of a class action suit would look like.
cavisne 4y ago
When finding a new apartment a few years ago I scraped a few sites. The variance in price is pretty interesting, ie. certain days of the week were better to press "Apply" on the rental form. There is no strict need for this software to be anti competitive, now that prices are online they can do plenty of experimentation day to day on their own prices. I also think the claim that they have some secret source of data from negotiated rents is not realistic, large companies don't really negotiate on rent. However its bad news for the company that the lead developers of their two big software platforms appear to have gone on record in a pretty negative way. Probably they got to greedy and have exposed themselves to anti trust by commingling data.
xtiansimon 4y ago
I’ve suspected a similar behavior results from real estate apps like Zillow. I was looking at NYC apartment prices in 2021 and I still get price estimate emails on properties I looked at almost two years ago. Im thinking if you’re an independent landlord, this feedback loop is driving your notions of “value”. A passive version of the OP?

178 points by carride 4y ago

This is the tip of the iceberg and has huge implications – for corporate power, competition, inflation, consumer spending power, quality of life. Monopolies and cartels are ubiquitous in the American business landscape. They aren’t highly visible, as they operate in the operational layers between stages of industry: rental unit pricing (as highlighted in this story), niche goods distribution, other services. They aren’t the classic top-down monopolies observers expect to see, yet they have the same impacts of exploiting their peripheries, eliminating competition, crippling innovation, and inducing inflation. I believe eliminating cartels and monopolies is the single greatest economic opportunity presented to the US.

landemva 4y ago
Cartel busting is about the only way to fix the enormity of government payments for Medicaid and Medicare. If not, then the federal spending will collapse something.

advisedwang 4y ago

Sometimes I feel like propublica is the only meaningful journalism going on. I listen to several podcasts and it feels like about 1/3 of them are re-telling the story of a propublica article.

boringg 4y ago
They probably took the work that propublica did and packaged into news bytes.

advisedwang 4y ago

The same thing is happening with salaries. Most HR departments set salaries based on "market reference points" derived from data from salary survey companies like erieri.com. But the HR depts also send their salary data to the salary survey companies (that is how they get a lot of their data). The result is all the companies in an industry are basically pooling their salary decisions and then carefully sticking close to what the others are paying. If the companies did this directly, it would 100% be wage-fixing. But somehow laundering it through an intermediate makes it legal.

pevey 4y ago
> But somehow laundering it through an intermediate makes it legal. It probably is illegal. This case with rents will be very interesting to watch. In the insurance industry, a special law (McCarran-Ferguson Act) had to be passed to allow companies to pool loss data to set rates. Otherwise, it was seen as an anti-trust violation. The law was passed because the public interest in making sure insurance companies are solvent and can pay claims outweighed the anti-trust issue. I think these tools are on very shaky legal ground.
preston4tw 4y ago
IANAL but wouldn't a judge look at that and just say it's wage fixing with extra steps?
- landemva 4y ago
  State attorney general could get it to a court and stopped, but apartment renters aren't in the political class so not a priority.
- dendrite9 4y ago
  CaaS, Collusion as a Service? This certainly seems like one of those cases worth watching.
  - Red_Leaves_Flyy 4y ago
    I think you mean Crime as a Service. Uber, Google, Amazon, eBay, PayPal, Instagram, TikTok, Facebook, Telegram, Reddit, etc all profit from crime. Companies facilitating collusion with a wink and a nod are the next logical progression of legitimizing white collar criminals. Police and prosecutors have spent ages chasing their tails with a self reinforcing drug war while mr burns types have been building infrastructure to brazenly fleece the public in broad daylight for decades. It’s time for major investment in dismantling white collar crimes outfits, like apartment price fixing, realtor corruption, wage fixing, wage theft, and the obscene culture of flouting workplace safety standards in virtually every industry.
4y ago

prpl 4y ago

On some reflection, I don’t understand how this app ever makes it around those regulations in a form where it’s largest users can factor in advertised and actual rent prices to their prices, especially in a world of consolidation, where these companies strive to own or manage most properties in big cities.

dd82 4y ago
one bigger opinion I have is I really hope the engineers and people at this company get screwed royally by their product in the coming years. Since they're doing an excellent job of screwing people.
- ROTMetro 4y ago
  This. I am a garbage human being and even I pass on working on 'solutions' that just make the world a worse place.
treis 4y ago
It's one of those things that's such an obviously bad idea that it should be illegal regardless of the consequences. That said, I'm pretty dubious that this sort of sharing has had much of an impact. Prices at big apartment complexes aren't exactly secret. You lose some fidelity due to negotiated discounts/concessions and you lose exact occupancy information. But the publicly available information is good enough to use as comps.

buscoquadnary 4y ago

Trust busting trust busting trust busting trust busting trust busting

such12 4y ago
pwinnski 4y ago
Indeed, RealPage is an acquisitive beast. Their Wikipedia page[0], as I write this, is largely a list of companies they've acquired. I know a lot of HN posters live in hope of developing something that will be acquired by a FAANG, but corporate acquisitions are usually bad for everyone but the person running the company being acquired. 0. https://en.wikipedia.org/wiki/RealPage https://en.wikipedia.org/wiki/RealPage

dang 4y ago

Recent and related: Rent going up? One company’s algorithm could be why - https://news.ycombinator.com/item?id=33224502 https://news.ycombinator.com/item?id=33224502 - Oct 2022 (279 comments) I think there were other threads also?

takoid 4y ago
Here’s another from around 11 hours ago (only 6 comments): https://news.ycombinator.com/item?id=33313028 https://news.ycombinator.com/item?id=33313028
carride 4y ago
Yes, that discussion was based off Propublicas article reporting about the problem. The following days the lawsuit was filed which is the propublica is reporting on here.

kazinator 4y ago

> uses aggregated market data from a variety of sources in a legally compliant manner That will be interesting. If they are thinking that "legally compliant manner" is rooted in nothing more than having permission to the data (for instance, because users of their software sign off on it in the licensing agreement), they may be in for a surprise.

AlbertCory 4y ago

The title "rent-seeking" is deceptive. I'd call it "clickbait" but my preferred term "illegal collusion" also draws clicks and is more accurate. Sharing your own negotiated prices may or may not be legal, but it's often bad manners at the very least and damages your business relationships. My submission today "Culture at Google: Part One, the Movies" deliberately does not say how much I paid for PPRs, because I was asked not to tell other distributors that.

braingenious 4y ago
The title is “rent-setting” not “rent-seeking.” This is accurate because the software is literally used to set rental prices.
- AlbertCory 4y ago
  Oops. You're right. Sorry.

emptyparadise 4y ago

we could've used computers for good but instead we're telling them to commit illegal price-fixing collusion

ZoomerCretin 4y ago

If all the landlords in an area use this and discover that the real market rate for rent is double, what is different from them doing this independent of each other and independent of this software? Does this not simply enable price discovery to occur at a faster pace?

evancox100 4y ago
The difference is whether or not they colluded with their supposed competitors to set rents twice as high.
- ZoomerCretin 4y ago
  Doesn't that require a monopoly or an oligopoly among the competitors to exist? What does it matter if 10 landlords collude to double rents if they only control 10% of the rental market?
  - longtimelistnr 4y ago
    Wouldn’t it matter if that 10% was in a concentrated area? As in whole neighborhoods?

encryptluks2 4y ago

Corporations being this brazen are not going to go away by one lawsuit. These companies are smart enough to protect their interests even if you take down the company. They'll just rebrand. People with money rarely see any real consequences. Just a small slap on the wrist and they just get smarter and more creative in ways to get away with this stuff.

constantcrying 4y ago

ranrotx 4y ago

It’s also not so much about RealPage, but the consolidation that has occurred in rental property ownership and management over the years. Now take what RealPage is doing with apartments and imagine if every major airline used the same revenue management solution (most use their own which are proprietary) to set airline fares. I hope RealPage (and these investor-owned apartment owners) pay dearly for this. Imagine what the size of a class action suit would look like.

cavisne 4y ago

When finding a new apartment a few years ago I scraped a few sites. The variance in price is pretty interesting, ie. certain days of the week were better to press "Apply" on the rental form. There is no strict need for this software to be anti competitive, now that prices are online they can do plenty of experimentation day to day on their own prices. I also think the claim that they have some secret source of data from negotiated rents is not realistic, large companies don't really negotiate on rent. However its bad news for the company that the lead developers of their two big software platforms appear to have gone on record in a pretty negative way. Probably they got to greedy and have exposed themselves to anti trust by commingling data.

xtiansimon 4y ago

I’ve suspected a similar behavior results from real estate apps like Zillow. I was looking at NYC apartment prices in 2021 and I still get price estimate emails on properties I looked at almost two years ago. Im thinking if you’re an independent landlord, this feedback loop is driving your notions of “value”. A passive version of the OP?