Renters throughout Seattle, Washington, have banded together to file a class action lawsuit that alleges they are the victims of price-fixing perpetuated by a software company’s algorithmic influence. Named in the lawsuit are the software company and nine property management companies that subscribed to the company.

The lawsuit stems from an investigation conducted by the nonprofit organization ProPublica. ProPublica's report found that real estate properties through Seattle were priced not according to market value but according to data provided by Texas-based third-party software company, RealPage.

Realpage is a data collection service that analyzes local data and recommends rent pricing to landlords based on that data. ProPublica's report found that all 10 property management companies that subscribe to RealPage had inflated prices as compared to other property managers that did not. ProPublica outlined that "70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage."

The impacted Seattle renters included those living in densely populated neighborhoods including Capitol Hill, the Central District, South Lake Union, and Queen Anne.

The lawsuit explains that "leasing giants began to work together to increase lease prices for Seattle renters. Instead of using an independent pricing metric and supply decisions, they agreed to use a third-party pricing and data collection service, RealPage, to make unit-specific lease adjustments."

Collusion in this manner takes away the free competition that markets demand to best serve customers, or in this case renters. By colluding in this manner, renters had a limited selection of housing options, and the options that were available were “price-fixed” in order to best meet the monetary needs of property managers and landlords.

The lawsuit explains that “beginning in approximately 2016, and potentially earlier, Lessors replaced their independent pricing and supply decisions with collusion. Lessors agreed to use a common third party that collected real-time pricing and supply levels and then used that data to make unit-specific pricing and supply recommendations. Lessors also agreed to follow these recommendations, on the expectation that competing Lessors would do the same.”

A similar lawsuit was filed in the U.S. District County in San Diego alleging similar claims that RealPage operated in a manner that allegedly allowed price-fixing within the market. Their lawsuit explains that RealPage operated as “a cartel to artificially inflate the price of and artificially decrease the supply and output of multifamily residential real estate leases from competitive levels.”

In ProPublica's report, RealPage issued a statement that explained the company “strongly denies the allegations and will vigorously defend against the lawsuit.”

Real Page went on to share that it “uses aggregated market data from a variety of sources in a legally compliant manner.”

The nine property management companies are some of the nation's largest firms and include Greystar, Lincoln Property Company, Equity Residential, Mid-America Apartment Communities, and FPI Management. Following the announcements, none of the property management companies shared a statement related to the lawsuit.