HARTFORD, CT – U.S. Sen Richard Blumenthal is sponsoring two bills to stop what he says is price gouging by landlords who use shared software platforms as a way to collude with other landlords to raise rents across the nation.
Blumenthal is a co-sponsor of both bills – the Preventing Algorithmic Collusion Act (S.3686) and the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act (S.3692) – which are aimed at different aspects of preventing rent hikes for residents. He said landlords are engaging in algorithmic “price-fixing” through a shared software system through which landlords report rental data.
The bills are aimed at companies like RealPage and Yardi, who sell “property management software” to landlords. The software, according to reporting from ProPublica, often ends up resulting in huge rent increases.
Neither RealPage nor Yardi responded to requests for comment on this story.
Blumenthal said that the country is “in the midst” of a housing crisis, and that the software that landlords are knowingly using are contributing to the crisis. In effect, he said, they are creating price gouging.
“What’s happening here is that prices are set, collusion is achieved, through software and algorithms,” Blumenthal said. “The algorithms collect data, in real time, and then coordinate. In other words, they’re price fixing.”
The Preventing Algorithmic Collusion Act would:
- Make it easier to challenge algorithmic price-fixing and help antitrust enforcers stop algorithmic price-fixing before it occurs;
- Require companies that use algorithms to disclose that fact and give antitrust enforcers the ability to audit the pricing algorithm when there are concerns it may be harming consumers;
- Ban companies from using sensitive information from their direct competitors to inform or train a pricing algorithm, and;
- Direct the Federal Trade Commission (FTC) to study pricing algorithms’ impact on competition.
Separately, the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act would:
- Make it unlawful for rental property owners to contract for the services of a company that coordinates rental housing prices and supply information, and designate such arrangements a per se violation of the Sherman Act;
- Prohibit coordination between two or more rental property owners;
- Make it unlawful for two or more coordinators to merge where a merger creates an appreciable risk of materially lessening competition; and
- Allow individual plaintiffs to invalidate any pre-dispute arbitration agreement or pre-dispute joint action waiver that would prevent their bringing a suit under this act.
Blumenthal was joined by Tom Freeman, a staff attorney at Greater Hartford Legal Aid, who agreed that the state, and the country, is in a housing crisis.
“A lot of our clients, they like living in the Hartford area, and they like living in Connecticut,” Freeman said. “It’s their home. It’s where their friends, family, and their community is, and because of these continually rising rents – these artificially raised rents – they have to move somewhere else or face homelessness.”
Freeman said the trouble of having to leave a home, or job, or school, is traumatic, and that rent prices are increasing even as the quality of living for residents of those units goes down.
“What is one supposed to do when the rent keeps on increasing?” Freeman said.
The National Apartment Association (NAA) — which is made up of members from across the country — said in a statement Wednesday that implementing and embracing new technologies is important:
“NAA and our members are committed to embracing new technology, like algorithms and AI, in a responsible manner that will help provide data-driven insights into supply and demand. We cannot lose sight of the fact that our nation’s affordability crisis is furthered by a critical lack of all housing types – we need 4.3 million new rental homes by 2035 just to keep pace with demand and address the current housing shortfall.”
The Preventing the Algorithmic Facilitation of Rental Housing Cartels Act is endorsed by the American Economic Liberties Project, the National Low Income Housing Coalition, and the National Alliance to End Homelessness.
