Kentucky AG accuses software company of inflating rent using pricing algorithm in new lawsuit

LOUISVILLE, Ky. (WDRB) -- With the cost of living going up, Kentucky's attorney general said a software company is making rent a bigger part of the problem and is taking the issue to federal court.

In a lawsuit filed July 2, Attorney General Russell Coleman targets RealPage Inc., a multibillion-dollar Texas-based company used by many rental companies across Kentucky. The lawsuit also names those Kentucky rental companies: BH Management Services, First Communities Management, Greystar Real Estate Partners, Highmark Residential, Independence Realty Trust, Mid-America Apartments, Mid-America Apartment Communities, RPM Living and Willow Bridge Property Company.

Coleman said the company compiles algorithms and competitor data to suggest rent prices for landlords using information that isn't public.

The intent, the attorney general said, is to charge the highest rents possible. The lawsuit claims this practice is anti-competitive and puts renters at a disadvantage.

The complaint alleges RealPage "replaces competition with coordination," doing so "openly and directly" while leaving Kentucky renters "paying the price."

"Rents are already high enough, and when people can maximize it to every last dollar, you're removing every competitive edge a tenant might have to keep prices down," Arthur Crosby, with the Kentucky Fair Housing Council, told Fox56 News.

The attorney general's complaint alleges RealPage "engaged in unlawful price fixing while violating federal antitrust laws and Kentucky's Consumer Protection Act." The complaint asks the federal court to keep the company, and similar companies, from "continuing their illegal actions and pay civic penalties up to $10,000 for each violation."

In a press release earlier this month, Coleman said 560,000 households in the state are occupied by renters, a number he said continues to grow. He added that in 2023, 47.5% of renters were "cost-burdened," spending at least 30% of their income on rent. At the same time, Coleman said, Louisville's increasing rent prices were ranked the second-highest among all markets in the U.S.

"Out-of-state corporations are taking advantage of Kentuckians, and they're circumventing the free market to do it," Coleman said in the release. "These predatory businesses will face serious consequences in Kentucky."

To read Coleman's complaint, click here.

The list below names apartments in the Louisville area managed by the companies listed in the complaint:

BH Management Services:

Claiborne Crossing Apartments
Elevate at NuLu
Valley Farms Apartments

First Communities Management:

Century Belmont Station Apartments

Greystar Real Estate Partners:

Main & Clay apartments
Trifecta
Clubhouse
Breckinridge Square
Mallard Crossing
Rolling Hills
The Terra Apartment Homes
The Lodges on English Station
Middletown Landing

Highmark Residential:

The Ivy Apartment Homes
Orchard Hills
The Legends
Maple Brook Apartments
Glenmary Village

Independence Realty Trust:

Brookside
Jamestown at St. Matthews
Oxmoor Apartments
Prospect Park

Mid-America Apartments/Mid-America Apartment Communities:

Westport

RPM Living:

The Rye

Willow Bridge Property Company:

The Residences @ The Omni
Lakeside Garden Apartments

The Kentucky lawsuit comes after the U.S. Department of Justice, under former President Joe Biden, filed a civil antitrust lawsuit against RealPage Inc. last August for an "algorithmic pricing scheme that harms millions of American renters."

"Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law," former U.S. Attorney General Merrick B. Garland said in a statement at the time, alleging the company's pricing algorithm "enables landlords to share confidential, competitively sensitive information and align their rents."

In the complaint, the DOJ pointed to RealPage executives' own words about how their product maximizes prices for landlords, including a quote from one executive that 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."

In a statement following the DOJ's lawsuit being filed, RealPage said the claims were "devoid of merit and will do nothing to make housing more affordable." A spokesperson for the company added that their software is used on fewer than 10% of rental units in the U.S., and that their price recommendations are used less than half the time.

The company has denied the allegations, claiming the real driver of high rents is a lack of housing supply. It also denied providing "price fixing software" or a "coordinated pricing algorithm," adding that its pricing recommendations align with whatever property-specific objectives the housing providers want to achieve using the software.

Several cities have passed ordinances restricting landlords from using rental algorithms, including San Francisco, Philadelphia and Minneapolis. RealPage has also been sued by tenants and several other attorneys general, including Coleman.

In April, RealPage sued the city of Berkeley, California, after it became the latest city to attempt to block landlords from using algorithms when deciding rents. Its lawsuit claims the ordinance 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."

To read more about the civil lawsuit, click here. To look at additional documents in the civil case, click here.

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