The battle over RealPage’s controversial AI "rent-fixing" software is heating up as the property management platform files suit against the New York Attorney General's office, declaring that the state's newly enacted ban on GenAI algorithms violates its First Amendment rights. Cybernews investigates.
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RealPage challenges New York's AI rent-fixing ban as First Amendment violation, calling restrictions "unconstitutional."
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Lawsuit comes on heels of DoJ antitrust deal requiring RealPage to stop sharing competitor data and cease using recent lease info to train AI models.
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Legal precedent looms, threatening AI dynamic pricing algorithms across hospitality, tourism, retail, and other industries.
The "first of its kind" federal lawsuit aims to reverse New York Governor Kathy Hochul’s recently signed bill, set to take effect on December 15th, prohibiting landlords from using AI algorithms to set rent prices.
RealPage, purveyor of AI-driven real estate management software used by commercial property owners nationwide, claims the soon-to-be-enacted law is based on “unsubstantiated claims” that the company’s “algorithmic rent software fixes housing prices.”
The lawsuit, naming New York State Attorney General Letitia James, was filed just days after the US Department of Justice (DoJ) announced its own settlement agreement over a 2024 antitrust enforcement case brought against RealPage over the platform’s “algorithmic coordination, information sharing, and other anticompetitive practices in rental housing markets across the country.”
Tramples First Amendment rights
The tech real estate platform says New York’s “unconstitutional statute bans lawful speech” and was prompted by an “often-repeated intentional misinformation campaign” about its revenue management software.
"This law denies housing providers access to lawful analysis and information that helps them meet the needs of their communities," said RealPage President and CEO Dirk Wakeham.
Theodore Boutrous Jr., partner at Gibson, Dunn & Crutcher, the law firm representing RealPage, says the state’s misguided effort to manage rental prices “tramples on RealPage’s First Amendment right to offer advice and recommendations."
"New York legislators should propose real solutions to housing affordability issues instead of banning constitutionally protected speech," Boutrous said in the press release announcing the NY lawsuit.
However, the DoJ lawsuit against RealPage charges that its revenue software relies on “nonpublic, competitively sensitive information” shared among landlords, effectively allowing competing management companies to coordinate and set rental prices at the consumer's expense.
“Competing companies must make independent pricing decisions… the settlement will help restore free market competition in rental markets for millions of American renters,” the DoJ stated in last week’s announcement.
"Slap on the wrist" settlement
As part of the DOJ settlement proposal (still awaiting final court approval), RealPage will be required to cease sharing competitors' non-public, sensitive data to set rents in real-time and stop using active lease data from within the past 12 months to train its AI models.
Other restrictions include removing/redesigning features that restrict price drops or sync competitors’ prices, stopping market surveys that gather sensitive competitive data, and allowing a court-appointed monitor to oversee compliance.
Still, even with a slew of new restrictions, many tenant advocates called the RealPage settlement “a slap on the wrist,” questioning the lack of monetary fines imposed on the property management software company.
Furthermore, about a week before the DoJ settlement proposal, Tennessee scored a major victory against RealPage’s rent-setting algorithms, “securing $142 million in rent relief” for 27 defendants in a class action involving 26 landlords using the AI-driven software.
“Why did @AAGSlater settle the DOJ's case just as the walls were closing in on RP?” questioned Lee Hepner, anti-monopoly law and policy expert at the American Economic Liberties Project.
Eight other states, including California, Connecticut, North Carolina, Minnesota, Tennessee, and Washington, had signed onto the DoJ lawsuit.
Additionally, Berkeley, California, in October, also passed legislation to restrict the use of AI rent algorithms starting in early 2026, alongside several major US cities, including San Francisco, Philadelphia, and Seattle – meaning the case against New York will set a legal precedent and likely reverberate throughout other industries, for example, in retail, tourism, and hospitality, such as pricing hotel rooms.
US lawmakers recently called on Delta Air Lines to explain its planned expansion of AI surveillance to determine individualized ticket pricing, fearing it will lead to jacked-up fares, discrimination among travelers, and privacy abuses.
Even so, supporters of RealPage have also pointed out that “rents have continued to climb in cities like San Francisco, where data-driven pricing has already been restricted.”
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