New Jersey bans AI-powered rent-setting software used by landlords
The FAIR Act prohibits software that recommends rents using competing landlords’ private data, a practice state officials say inflated housing costs.
Gov. Mikie Sherrill signed legislation Monday banning landlords from using algorithmic software that recommends rent prices based on competing landlords’ private data, a practice state officials say helped drive up rents through unlawful coordination.
The Forbidding the Algorithmic Inflation of Rent (FAIR) Act prohibits landlords from using software that recommends rents by analyzing private, nonpublic data shared by competing landlords.
“The problem is that these tools put competing landlords on the same team against renters,” Sherrill said at a bill signing. “Landlords can use these algorithms to coordinate prices, move in lockstep, and push rents higher and higher. It’s collusion by algorithm, and it’s illegal.”
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The New Jersey Senate passed the FAIR Act on June 18, and the Assembly approved it on June 30.
The legislation comes amid growing scrutiny of property management software such as RealPage, which describes itself as “the first AI-powered operating system built for multifamily” property management. The U.S. Department of Justice and several states, including New Jersey, have sued RealPage, alleging its software helped landlords coordinate rent prices in violation of antitrust laws. RealPage and several major landlords agreed to a nearly $360 million settlement in a private antitrust lawsuit while denying wrongdoing.
Under that settlement, RealPage agreed to stop using certain nonpublic competitive data to generate rent recommendations and to eliminate features that aligned rents among competing landlords.
Advocates for affordable housing told The Jersey Vindicator’s Dylan Jovanovic that New Jersey’s housing shortage remains the primary driver of high rents, but said the FAIR Act could help prevent additional increases.
“The FAIR Act will be a critical new tool in our efforts to make housing more affordable,” said Executive Assistant Attorney General Sundeep Iyer at Monday’s bill signing. The Attorney General’s Office will create an online system where tenants and others can report alleged violations of the law.
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Curtis Brodner is a Report for America corps member covering housing and affordability for The Jersey Vindicator. He investigates the policies, people, and institutions shaping where New Jersey residents can afford to live, with a focus on accountability and solutions. Previously, he was a criminal justice reporting fellow with Columbia Journalism Investigations, producing investigative work for New York Focus. He earned a master’s degree from Columbia Journalism School as a Toni Stabile Center fellow and a bachelor’s degree in journalism from SUNY Purchase. You can reach him at Curtis AT jerseyvindicator.org.