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Democrats are taking aim at the rental industry in a bill that would require companies to disclose the use of algorithms when setting rental prices.
Senator Amy Klobuchar (D-MN) initially introduced the Preventing Algorithmic Collusion Act in 2024; however, it didn’t gain much steam after being forwarded to the Senate Judiciary Committee in January. Klobuchar and eight co-sponsors believe the bill will get more traction this time around, as the nation struggles with a growing affordable housing crisis.
Senator Amy Klobuchar
“Housing is still the largest monthly expense for most households, and that includes rent,” Klobuchar told ABC News in an exclusive interview on Thursday. “We have clear documentation from economists that this price-fixing by algorithms increased the rents by nearly $4 billion in 2023 — we know this is happening, and it’s so hard for people to get by now anyway.”
The Act directs the Federal Trade Commission to complete audits of rental companies that develop or use algorithms to set prices.
In the audit, companies would be required to disclose the source of its pricing algorithm, outline rules and data the algorithm uses to set prices, explain how it sources data for the algorithm, highlight any instances of price discrimination among consumers seeking the same or similar products, and share whether there’s a human review process of the prices the algorithm sets.
A company’s chief executive officer, chief economist, chief technology officer or an officer in a similar role would be responsible for certifying the report before submitting it to the FTC or Attorney General’s office in their state.
If the audit reveals wrongdoing, the company is subject to a civil penalty of up to $10,000 for each day the violation occurred, another penalty equal to the sum of the price of each product or service sold using the pricing algorithm in violation of the Act, and any other “appropriate relief” the Courts deem necessary.
Klobuchar pointed to the Department of Justice’s lawsuit against rental software maker RealPage as a prime example of why the Act is needed.
The DOJ accused RealPage of violating the Sherman Act by creating and distributing an algorithm that effectively allowed landlords to share information and fix prices. RealPage has continuously denied wrongdoing, with a company spokesperson telling Inman in January that the DOJ is “[scapegoating] pro-competitive technology that has been used responsibly for years.”
“It’s just textbook collusion,” Klobuchar told ABC. “It’s clearly illegal for these landlords who compete with each other to get together for dinner one night and go, ‘Hey, let’s all set our rents high and then we won’t compete with each other.’ Well, this is just a high-tech, sophisticated way of doing it, and our laws need to be as sophisticated.”
The Minnesota senator said she hopes the DOJ, now under the direction of Attorney General Pam Bondi, will continue its RealPage investigation, which now includes Greystar Real Estate Partners, Blackstone’s LivCor, Camden Property Trust, Cushman & Wakefield Inc and Pinnacle Property Management Services, Willow Bridge Property Company and Cortland Management.
“But there are some good people that are going to keep doing this work within the bowels of the Department of Justice,” she said. “So my hope is that there will be continued antitrust enforcement.”
