Two years after it became law, Philadelphia’s ban on using AI algorithms to set rent is being tested in court.
Three separate lawsuits filed this month accuse property management companies of using software tools to coordinate what they charge tenants.
“It is illegal for a software provider to give real estate lessors software that collect non-public competitor data and recommend rental prices, fees, rental terms, or occupancy levels,” reads one of the suits, filed by Philly resident Yiyao Liu against Dallas, Texas-based Willow Bridge Property Company and Richardson, Texas-based property management platform RealPage, “and illegal for a real estate lessor to pay for it,”
Philadelphia law bans the use software tools that collect and share data like rent prices, occupancy levels and lease end dates to suggest how landlords should price their offerings.
“This suit, I hope, will be a strong test of … what can happen if firms don’t heed local law.”
Philadelphia Councilmember Nicholas O’Rourke
Philadelphia City Council unanimously passed legislation to prevent these practices in October 2024 and Mayor Cherelle Parker signed it into law shortly after. At-Large Councilmember Nicolas O’Rourke led the charge to pass this legislation.
“This suit, I hope, will be a strong test of whether the ban has had its intended chilling effect,” O’Rourke told Technical.ly, “and what can happen if firms don’t heed local law.”
Represented by attorney Alec Leslie, Liu filed suit against Willow Bridge and RealPage in the Philadelphia Court of Common Pleas on July 6, alleging that the property management firm used RealPage’s software to collect rental property data from competitors and use it to recommend rent prices and occupancy levels. Leslie also represented plaintiffs in two similar cases filed the week prior: On July 2, resident Asher Grossman sued Bozzuto Management Company, RealPage and California-based Yardi Systems, while resident Sarah Jahanbakhsh sued Greystar Management Services, RealPage and Yardi Systems.
Screenshot of RealPage’s website
Philadelphia isn’t the only place to ban these alleged practices. San Francisco was the first municipality to outlaw rent fixing, in July 2024, and other cities and states have since followed with similar legislation. Earlier this month, neighboring New Jersey established a law that regulates the use of algorithmic rent-fixing tools.
This is also not the first time RealPage has been sued for these practices, alongside major property management companies. The DOJ recently filed a settlement with Willow Bridge Property Company for using RealPage’s software.
Neither Yardi Systems nor any of the property management companies responded to a request for comment. Leslie, the plaintiffs’ attorney, also did not respond. RealPage told Technical.ly it did not comment on ongoing litigation.
Suits allege the tech platforms are pulling non-public data
All three lawsuits underway in Philly Common Pleas Court allege that the property management company in question used software tools for price coordination.
Philadelphia’s legislation defines price coordination as collecting information about rental prices, price changes, supply levels, occupancy rates, or lease renewal and end dates from multiple property owners or landlords. It also involves using that information to suggest prices, lease terms and other rental factors.
Philadelphia’s law makes it illegal for landlords to agree to not compete with each other when setting rent prices or using services or products that facilitate price coordination.
RealPage, founded in 1998, sells software to property owners and property management companies. The company’s platform includes tools to manage lease agreements, resident services, finances and other aspects of renting out properties.
Yardi Systems, founded in 1984, offers similar products for property owners and is one of RealPage’s biggest competitors.
The Department of Justice sued RealPage in 2024, alleging that the company’s technology allowed landlords to share information with each other and set rent prices above market rate. RealPage settled that lawsuit the following fall, agreeing to stop using non-public data.
The lawsuits in Philadelphia detail how RealPage and Yardi’s products allegedly use information that isn’t publicly available. Yardi’s product Yardi Matrix pulls data from the company’s property management software and from market pricing surveys conducted by the company to inform its other products, the lawsuits allege.
RealPage’s tools AI Revenue Management and YieldStar use landlords’ data to train its machine learning model and recommend rental prices, the lawsuits allege, while another product, Lease Rent Options, generates suggestions based on competitor data that users put into the system.
“RealPage software collects non-public competitor information from numerous competing landlords,” reads the lawsuit filed by Liu, “and uses one or more algorithms to recommend rents and occupancy levels to various landlords within the Philadelphia market.”