YieldStar Sued Over Allegedly Ballooning Leasing Rates

• US-based YieldStar is facing a legal battle in Canada for allegedly colluding with property owners and brokers to inflate rental prices
• YieldStar denied allegations, saying its software generates apartment pricing recommendations for landlords
• The lawsuit sought to return money into tenants’ pockets and prevent anti-competitive behaviors across large firms

US-based rental software YieldStar, a subsidiary of RealPage Inc., is facing another legal battle in Canada for allegedly conspiring with property owners and brokers to control leasing rates.

A report by Financial Post on Wednesday said that Adam Tanel, a partner in Koskie Minsky’s Class Action Group, sued YieldStar after looking into the latter for quite some time.

“If corporations, who ostensibly should be competing, are sharing sensitive information with one another so that they can all increase the price of their goods, that is contrary to the Competition Act,” Tanel was quoted as saying.

YieldStar defended itself, saying that its software only generates apartment pricing recommendations for landlords by reviewing market surveys, unit types, pricing categories and availability.

Its parent firm, RealPage, also said that it leverages real-time rent transaction data in order to respond to changes in supply and demand, meaning proposed rent changes could skew higher or lower.

However, Tanel said that the software collects sensitive pricing information that would not be typically shared amongst competitors, allowing landlords to conspire and control prices of their rental units.

He also claimed that it was a requirement for the users of the software to accept the pricing recommendations, thereby forcing them to pay non-competitive rates or leave and find other accommodations elsewhere.

In a recently released statement, RealPage said that it closed its criminal investigation into pricing practices in the multifamily rental housing industry and that it will “continue to aggressively defend itself in the remaining, previously filed civil lawsuits.”

Next steps

According to Tanel, the next step is to have the lawsuit certified as a class proceeding.

While the allegations have yet to be proven, he said the lawsuit aimed to achieve two primary goals—to return money into the tenants’ pockets who may have paid more than they would have, and to discourage potential anti-competitive behavior among large companies.

The proposed class action sought a financial compensation for tenants who have resided in any of the concerned properties or operated under YieldStar software since 2009.

Last year, another property management software called Yardi Systems, faced a similar lawsuit in the US for also allegedly colluding with property brokers and owners to inflate rentel prices.

Yardi has since responded to allegations on its website, saying that its software “does not use (and has never used) confidential, competitor, or non-public rent data for adjusting asking rent” and that it intended to “vigorously defend” itself against the lawsuit.

In early December, Yardi and 10 property management companies named in the US lawsuit lost their bid to dismiss the case.