Hagens Berman

Antitrust Lawsuit Accuses 18 Property Management Companies and Yardi Systems of Rent Price-Fixing Scheme Affecting Millions of Renters - Seite 2

“As if underhandedly conspiring across these companies to raise rents wasn’t bad enough, Yardi had the audacity to name its tool something as brazen as RENTmaximizer,” Berman said. “We intend to fight for the rights of anyone subjected to this rent price-fixing scheme who has been left to pay inflated prices during a historically tumultuous time.”

Through Yardi’s software, otherwise competing rental companies teamed up to outsource their pricing decisions to Yardi, thus artificially eliminating any competition between them. According to Yardi promotional documents cited in the lawsuit, a key input to Yardi’s pricing algorithm – along with companies’ own price and availability data – is comparative rent, which is input into Yardi’s algorithmic “pricing engine” to generate supracompetitive rent recommendations.

“Defendant Yardi and the Operator Defendants collectively used Yardi’s ‘RENTmaximizer’ software to coordinate on setting supracompetitive pricing on multifamily properties across the nation,” the lawsuit states. “In a competitive market, these companies would compete on rental prices to attract renters—that is, they would set rents in accordance with the fundamentals of supply and demand.”

Thus, instead of courting would-be renters based on market conditions – for example, by offering move-in deals and competing on price – property management companies used Yardi’s algorithmic pricing tool to automate the rental pricing process. Yardi’s software thus effectively outsources the management of rental pricing from a landlord to Yardi itself, which then implements higher prices collectively across a group of landlords, according to attorneys. This eliminates the discounting that would occur in a competitive market, the lawsuit states.

Yardi has marketed its tools to rental companies as a method to “beat the market” and maximize profits, the lawsuit states, and claims in promotional videos that “revenue grows on Yardi.” Yardi also advertises that, through RENTmaximizer, it gives lessors “complete visibility” into the market, providing them with “property performance benchmarking . . . compared to the market, submarket and competition,” the lawsuit states.

The class action alleges that use of Yardi’s RENTmaximizer has led to property companies “aggressively” raising rents. The lawsuit cites a “test run” economic analysis finding an average overcharge of 6% on units priced using RENTmaximizer in certain zip codes, consistent with Yardi’s public statements that RENTmaximizer leads to, on average, a 6% average increase in lessors’ net rental income. The lawsuit also identifies statements by numerous lessors who have used RENTmaximizer to raise rents, including one who explained in 2016 that, without RENTmaximizer, “[w]e simply wouldn’t have raised rents that much or that quickly on our own.”