Cities and States Taking Action to Limit Rent-Setting AI

In an article for CALmatters, Wendy Fry explains how property owners are increasingly using the same AI tool to set rents in what federal prosecutors are calling “an unlawful information-sharing scheme.”

Many landlords now use a single company’s software — which uses an algorithm based on proprietary lease information — to help set rent prices.

“The illegally maintained profits that result from these price alignment schemes come out of the pockets of the people that can least afford it,” said California Justice Department spokesperson Elissa Perez.

In California and across the country, city leaders are taking action to prohibit the practice. In July, San Francisco became the first city to ban “the sale or use of algorithmic devices to set rents or manage occupancy levels.” Last month, Philadelphia passed a similar ban. San Diego and San Jose are considering their own ordinances. While a proposed state bill that would have banned algorithmic price-setting failed to make it through the legislature this year, the lawmaker who introduced it says she will bring it back in the next session.

Meanwhile, a federal antitrust suit charges the company, RealPage, with enriching itself and landlords at the expense of renters by artificially inflating prices. Federal officials say the company controls 80 percent of commercial revenue management software.