RealPage Braces for DOJ Lawsuit

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Technology is combating the rise in rental fraud caused by digital applications and increasingly sophisticated fraudsters, including the proliferation of “synthetic fraud.” Plus, the DOJ plans to sue RealPage for price-fixing, potentially ending its profitable YieldStar software.

RealPage Braces for DOJ Lawsuit

An article released over the weekend claims that the Department of Justice plans to sue RealPage over their rent optimization software. The article cites "two people with knowledge of the matter" who revealed that the DOJ was preparing for legal action.

A DOJ lawsuit isn't a complete surprise. The agency has been outspoken about its stance on algorithmic price fixing. In its 33-page Memorandum of Law, the DOJ argued that allowing competitors to share the same pricing tool constitutes "horizontal" price fixing, which is "inherently anticompetitive."

According to the DOJ, "the alleged scheme is horizontal because it eliminates some degree of rivalry between persons or firms who are actual or potential competitors, namely, the competing landlords that have allegedly agreed to use RealPage’s pricing algorithm and follow its recommendations."

RealPage anticipated this lawsuit after the FBI raided one of its clients, Cortland, who is also named as a defendant in several civil lawsuits.

Now, RealPage must consider how to respond to the DOJ. Fighting the DOJ might not be the best idea for RealPage, as the country's lead Attorney General typically doesn't file a lawsuit unless there is enough evidence to prove their case. However, the DOJ isn't always out for damages like normal plaintiffs. Instead, they might seek an injunction, forcing RealPage to stop using its pricing software.

If enough pressure is put on RealPage, they might opt to settle their cases and discontinue the use of their YieldStar software, despite the profitability of this popular tool.

What’s Happening in Commercial Real Estate

Short and hard
Shortseller Viceroy has released a report accusing Arbor Realty Trust of fraud for not disclosing certain writedowns of its portfolio in its first quarter financial statements. Arbor’s CFO has released a statement saying that the transaction in question will be reported in the second quarter financials.

Didn’t start the fire
The property insurance industry is on a mission to change building standards to include fire resistant construction techniques. One of the ways that they are making their case is by showcasing how easily some buildings can burn at trade shows and conferences.

Spotlight

The pandemic has led to a surge in multifamily rental fraud as more applications move online, exposing outdated fraud detection methods. TransUnion reports that 60% of property managers have faced fraud, often realizing it too late, resulting in high financial and reputational costs. Synthetic fraud, involving fake identities, is the fastest-growing type of identity theft. To combat this, property managers need advanced technology and improved fraud detection techniques.

Propmodo Technology

Indoor air quality (IAQ) is essential in post-pandemic building environments. But, balancing IAQ with energy efficiency can be challenging. Strategies such as commissioning and advanced HVAC systems can help improve occupant health and ensure regulatory compliance. Effective planning, technology integration, and maintenance are crucial for achieving high IAQ standards, reducing operational costs, and enhancing tenant satisfaction.

Check out this week’s Propmodo Technology focus on HVAC and Indoor Air Quality with the support of our friends at Partner Engineering and Science, Inc.

What to Watch

Join us on Tuesday, July 30th, for a Propmodo Live webinar where we will explore the latest office occupancy trends reshaping workplace performance and utilization. We'll delve into shifting demand patterns, highlight success stories from various sectors, and discuss the effects of hybrid work models on occupancy and operational strategies.

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