MINNEAPOLIS (FOX 9) – The Department of Justice (DOJ) has proposed a settlement with RealPage, the company that created an algorithm used by several major landlords accused in a rent price-fixing scheme, including four that operate in the Twin Cities, that would resolve a lawsuit brought earlier this year.

Justice Department proposal

What we know:

Under the proposal, RealPage would agree to limit the data it uses for its algorithm and modeling.

If accepted, RealPage would no longer be able to use real-time, nonpublic data to set rental prices nor train AI or algorithms on leases that are less than 12 months old.

RealPage would also be restricted from sending surveys landlords to get private pricing information.

As part of the agreement, RealPage also agrees to cooperate with the Justice Department in its lawsuit against other major landlords.

What they’re saying:

In a press release, the Justice Department says the agreement will help “restore free market competition in rental markets.”

“Competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division in a provided statement.

Ongoing lawsuit against landlords

The backstory:

Earlier this year, the DOJ sued six of the nation’s largest landlords, including Greystar Real Estate Partners, Cushman & Wakefield, Willow Bridge Property Company and Cortland Management, which operate in the Twin Cities.

The landlords were accused of using the RealPage algorithms and by sharing data with each other to drive up rental prices in Minneapolis and elsewhere.

“The idea is that landlords are conspiring to keep rents high for renters rather than allowing the market to normally set them to a rate that’s reasonable,” Julia Zwak, an attorney at Mid-Minnesota Legal Aid, told FOX 9 in January. “They’re getting information that normally competitors in the market wouldn’t be sharing with one another.”

After news of the lawsuit became public, the Minneapolis City Council passed an ordinance banning algorithmic rental price fixing.

Settlements reached:

After FOX 9 became aware of the lawsuit in January, Cortland Management announced it had reached a settlement with the Justice Department to stop using the pricing algorithms.

Last week, Attorney General Keith Ellison, who is involved in the lawsuit on behalf of Minnesota, also announced last week a settlement with the nation’s largest landlord Greystar. Greystar, which owns 950,000 rental units across the country including thousands in Minnesota, agreed to pay $7 million and stop using anti-competitive pricing algorithms to set rental prices.