Lawsuit alleging rent inflation in D.C. leads to $1 million settlement
Several lawsuits have been filed around the country in the past two years against RealPage, the maker of widely used property management software, alleging that the company collects landlords' private data to undermine competition and set higher rents.
Schwalb's office, which sued RealPage and 14 of the city's 'largest landlords' in 2023, said that the William C. Smith and Co. property management firm is the first defendant in the lawsuit to reach a settlement with the city. WC Smith, which owns more than 9,000 of the affected units, according to Schwalb's office, has denied that it 'violated any law or engaged in any anticompetitive conduct,' according to the settlement.
'We have consistently asserted that we did not participate in any of the activities alleged by the Office of Attorney General in the RealPage litigation. We now have been dismissed from this case without admission of the allegations or acceptance of liability,' John Ritz, president of WC Smith, said in a statement. 'By settling this matter, we avoid considerable and unnecessary legal expenses and can return our focus to creating thriving communities for the residents of Washington, D.C. — which has been our mission for more than 50 years.'
A spokesperson for RealPage did not immediately respond to a request for comment.
The alleged actions by the Texas-based company and the property management companies that use its software have garnered increased attention in multiple states after numerous complaints from tenants about their escalating rents.
In Maryland, Attorney General Anthony G. Brown (D) sued RealPage and six major landlords in the state earlier this year, alleging that RealPage products 'use non-public, competitively sensitive data — for example, the number of potential tenant visits to a property — to estimate supply and demand, and then generate a 'price' to charge that maximizes the landlord's revenue.' A bill that would have barred landlords from using RealPage software failed to advance to a vote.
In its lawsuit, Schwalb's office alleged that RealPage offers 'revenue management' software to real estate owners and property managers that relies on competitive, nonpublic pricing data to estimate supply and demand for rental units. RealPage uses that data to generate 'an artificially inflated rental price that maximizes the landlord's revenue,' according to his office.
More than 30 percent of D.C.'s apartments in buildings with five or more units, and about 6o percent of apartments in buildings with 50 units or more, are priced using RealPage's software, Schwalb's office said, leaving many residents 'with no choice but to pay RealPage's inflated rents.'
Monday's settlement requires WC Smith to pay just over than $1 million to the District in civil penalties, money for affected residents and legal fees. Under the settlement's terms, WC Smith is prohibited from using revenue management software that relies on nonpublic data to set rent prices. The company must also refrain from promoting this software to other firms.
'Rents in DC are already sky-high, and amidst this housing affordability crisis, many of the District's top landlords operated as a housing cartel — illegally colluding to push rents even higher,' Schwalb said in a statement. 'I commend W.C. Smith for putting an end to its anticompetitive practices and cooperating with my office to reach this agreement.'
'We will continue working to hold RealPage and the remaining landlords accountable,' he added.
RealPage has been the subject of lawsuits in several jurisdictions after a ProPublica investigation found that the company's software may have led to illegal rent increases. In an amended antitrust lawsuit filed in January, Illinois and Massachusetts joined eight other states and the Justice Department in alleging that RealPage coordinated with six property management firms to raise rents.
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