Two cities in Hudson County recently banned the use of rent-setting algorithms that rely on software and non-public data to determine rental prices that often gouge tenants.
Both Jersey City and Hoboken have taken action this year to prevent landlords from using such algorithms to potentially inflate rental costs through coordinated pricing strategies using the software.
However, these cities aren’t the only ones pushing back against the software and high rents.
Cities across the country are fighting against it.
The New Jersey Attorney General and federal officials got involved last year with separate lawsuits against companies that provide price fixing software.
The Justice Department, along with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit last year against RealPage Inc. for “its unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments,” according to a statement from the department.
RealPage’s alleged conduct deprives renters of the benefits of competition on apartment leasing terms and harms millions of Americans, the statement said.
The bans on the price fixing software reflect a growing movement in New Jersey and across the country.
Those fighting back claim algorithmic price fixing for rent is unfair because it can lead to artificially inflated prices and reduced competition, making housing less affordable for tenants.
These algorithms analyze data to suggest prices that maximize profits for landlords, potentially ignoring market conditions and preventing tenants from negotiating better deals.
Ultimately, it can create a situation where tenants are forced to pay more than they would in a truly competitive market, opponents say.
Last year, San Francisco made history by implementing the nation’s first ban on software that uses algorithms to set rents for tenants, according to the city’s website.
In Philadelphia, legislation restricting the use of nonpublic competitor data in setting rental prices was passed in 2024, according to the city’s website. Other cities like Minneapolis and San Diego are also cracking down with their own bans set up in the spring.
In New Jersey, Jersey City became the first municipality in New Jersey to ban these algorithms when it took action in May. Hoboken soon followed in July.
Officials say these measures aim to protect tenants from potentially unfair and artificial rents by prohibiting the use of software that shares data between landlords to determine prices.
Both Jersey City and Hoboken officials have expressed support for statewide legislation banning the use of such rent-setting algorithms.
Several bills have been introduced in the New Jersey Legislature to address this issue. One that would prohibit the use and sale of algorithmic devices for setting rent and another that make using those systems illegal.
The New Jersey Attorney General has filed a lawsuit against RealPage and 10 large New Jersey landlords, alleging a rent-raising scheme that violates antitrust and consumer protection laws by using algorithmic software to collude and suppress competition.
The property management software company RealPage, based in Texas, and the landlords allegedly used a pricing software that forced tens of thousands of New Jerseyans to overpay for rent, state Attorney General Matthew Platkin said.
“I’m not going to tolerate corporate greed that violates the law and hurts our residents,” Platkin said previously. “Our lawsuit today is seeking to make RealPage both stop their illegal conduct and pay back their illegal profits.”
RealPage did not return a request for comment.
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Stephanie Loder may be reached at SLoder@njadvancemedia.com.
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