16 Item by Mayor Pro Tempore Torosis, Councilmember Raskin and Councilmember Hall
PROTECTING RENTERS FROM PRICE FIXING SOFTWARE
FOLLOWING THE JANUARY FIRESTORMS
Since enacting Rent Control in 1979, Santa Monica has upheld strong tenant protections and rent stabilization policies to ensure housing security for all residents. However, in the wake of the January firestorms, which devastated communities and displaced many renters, the city is witnessing an alarming trend of rental price gouging in the region. With over 10,000 residential structures destroyed in Los Angeles County, many families have faced displacement, leading to a heightened demand for rental properties. This surge in demand resulted in reports of significant rent hikes, with rents increasing over the 10% maximum allowed during a state of emergency. For instance, the Los Angeles Tenants Union identified over 500 property listings where monthly rents abruptly jumped, in some cases more than doubling.
This crisis has been exacerbated by the use of algorithmic rental price-fixing software, such as YieldStar and RealPage, which allow landlords to share non-public, sensitive information about rental rates and occupancy. This data is used to generate pricing recommendations, which can lead to coordinated rent increases among competing landlords, effectively reducing competition and harming renters. Such practices undermine market competition, place renters at risk of financial hardship and displacement, and contradict the City's commitment to housing affordability.
In August 2024, the U.S. Department of Justice (DOJ), along with Attorneys General from several states, filed a civil antitrust lawsuit against RealPage and participating landlords.
The lawsuit alleges that RealPage's pricing algorithm enables landlords to share confidential information and align their rents, violating antitrust laws. Moreover, in March 2024, the Federal Trade Commission (FTC) and DOJ filed a legal brief stating that pricefixing through an algorithm is illegal. The agency emphasized that agreeing to use shared pricing recommendations or algorithms can be unlawful, even if competitors retain some pricing discretion (https://www.ftc.gov/business-guidance/blog/2024/03/price-fixingalgorithm-still-price-fixing).
Therefore, Mayor Pro Tem Torosis, and Councilmembers Raskin and Hall request that the City Attorney, in coordination with the Rent Control Board, draft and present to Council for adoption within 60 days, an ordinance banning the use of algorithmic rental price-fixing software in Santa Monica and which includes enforceable penalties for noncompliance.