January 30, 2024

Wyden and Welch Introduce Legislation to Crack down on Companies that Inflate Rents with Price-Fixing Algorithms

Senators Klobuchar, Sanders, Hirono, Butler, Merkley and Blumenthal Cosponsor the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act to Speed Up Enforcement Against Companies That Allow Landlords to Collude on Rent Increases

Washington, D.C. – U.S. Senators Ron Wyden, D-Ore., and Peter Welch, D-Vt., today introduced legislation to crack down on companies that help landlords increase rents in already high-priced markets. These services allow landlords to collude to set prices via software and price-setting algorithms. 

Reporting by ProPublica and other news outlets demonstrated how companies like RealPage and Yardi advertise their products as “property management software,” but in fact help landlords coordinate prices to increase rental rates in the same market. The companies collect real-time price and lease information and in return suggest rent increases. The result is less competition and higher rent prices for consumers. RealPage, for example, says that it increases rents for client landlords between 5% and 12%. 

“Setting prices with an algorithm is no different from doing it over cigars and whiskey in a private club,” Wyden said. “Although it's my view that these cartels are already violating existing antitrust laws, I want the law to be painfully clear that algorithmic price fixing of rents is a crime. High rents are already squeezing American families in Oregon and across the country - the last thing renters need is housing cartels getting in on the game.”

“Vermonters are amongst the hardest hit by the housing crisis raging across the country. We have the second-highest rate of homelessness in the nation. In the midst of this crisis and at a time when families are struggling to put food on the table, housing providers are using anticompetitive pricing algorithms to raise rents. It’s outrageous. The Preventing the Algorithmic Facilitation of Rental Housing Cartels Act would crack down on these pricing algorithms and prevent future monopolies on the housing market to protect renters in Vermont and nationwide,” said Senator Welch.

“When landlords delegate pricing decisions to algorithms, renters lose out on the benefits of competition and are faced with higher rates, while some homes are priced so high they sit vacant,” said Klobuchar. “This bill will ensure rental property owners abide by antitrust law and let market forces determine rents.” 

The legislation is cosponsored by U.S. Senators Amy Klobuchar, D-Minn. Bernie Sanders, I-Vt., Mazie Hirono, D-Hawaii, Sen. Laphonza Butler, D-Calif., Jeff Merkley, D-Ore., and Richard Blumenthal, D-Conn.

Specifically, the bill 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 the practice of coordinating price, supply, and other rental housing information among 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. 

This month, Wyden joined Senator Klobuchar in introducing the Preventing Algorithmic Collusion Act, which would ensure corporations in sectors beyond housing cannot use pricing algorithms as a backdoor way to collude and raise prices.

The Preventing the Algorithmic Facilitation of Rental Housing Cartels Act of 2024 is endorsed by the American Economic Liberties Project, the National Low Income Housing Coalition, and the National Alliance to End Homelessness. 

“If enacted, the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act of 2023 from Senator Wyden would provide an important tool to stop predatory landlords from colluding with one another by using rent-setting software and algorithms to further inflate rents,” stated Diane Yentel, president and CEO of the National Low Income Housing Coalition. “Congress should enact this legislation, along with the large-scale investments in rental assistance, public housing, and the national Housing Trust Fund to address the underlying causes of the housing and homelessness crisis.”

“Widespread use of price fixing software presents a new front in the housing affordability crisis,” said Lee Hepner, Legal Counsel at the American Economic Liberties Project. “RealPage boasts that its software can hike rents by double digits, supercharging housing costs for Americans already struggling to keep a roof over their heads. Real wages have increased under the Biden Administration, but if we do nothing to curb rent gouging by Wall Street investors, it’s one step forward, two steps back.”

“It is hard enough for people with low incomes to secure affordable housing without landlords colluding with third parties to raise rents higher than the market alone would dictate,” said the National Alliance to End Homelessness. “Introduction of The Preventing the Algorithmic Facilitation of Rental Housing Cartels Act may not command the attention it should because of its arcane subject matter, but Senator Wyden is to be commended for his clear leadership on a complicated issue.  Outlawing this collusion and explicitly providing federal and state governments’ authority to bring civil litigation when it occurs will ultimately help to reduce rents and, indeed, homelessness.”

The bill text is here.

A one-page summary is here.

A section-by-section is here.

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