Two Wisconsin Democrats released a proposal Wednesday to prohibit tech-enabled price fixing schemes in an attempt to prevent landlords from charging unfair and monopolistic rent.
The bill, authored by Sen. Kelda Roys, D-Madison, and Rep. Brienne Brown, D-Whitewater, would prohibit the use of algorithmic software in setting rental rates or occupancy levels and prohibit persons from selling, licensing or providing algorithmic software to a residential landlord.
Roys and Brown argued in the co-sponsorship memo that such algorithms engage in activities that would be illegal for individuals. Using these algorithms to conspire to fix prices, artificially raise rents and keep much-needed housing vacant, harming families and ordinary people who need a place to live.
The Daily Cardinal previously reported on potential usage of such software to collude on students’ rent pricing in October.
Last August, The U.S. Department of Justice (DOJ) filed a civil antitrust lawsuit against RealPage Inc., a property management software company used by landlords across the country. The lawsuit targets an allegedly unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize commercial revenue management software.
The complaint alleged that RealPage contracts with competing landlords who agree to share with RealPage “nonpublic, competitively sensitive information” about their apartment rental rates and other information to train RealPage’s AI Revenue Management and YieldStar algorithmic pricing software, both of which generate recommendations on apartment rental pricing for landlords based on their and their rivals’ sensitive information.
“Algorithmic software” is defined in the bill to include software that uses non-public competitor data regarding rent or occupancy levels to inform a landlord’s decision regarding occupancy rates or the amount of rent.
The Wisconsin Department of Agriculture, Trade and Consumer Protection, the Wisconsin attorney general or a district attorney may investigate violations of this bill and seek civil forfeiture of up to $1,000 per violation.
Under the bill, if a landlord includes a provision in a lease that waives the landlord’s obligation to comply with the prohibition on the use of algorithmic software or discourages a tenant from filing an action, the rental agreement is void and unenforceable.
“No matter where you are in Wisconsin, affordable housing is becoming harder to find. Housing costs are rising fast enough without letting landlords use computer-aided illegal price-fixing schemes,” Roys said in a statement Wednesday. “This legislation will help stop big tech companies from ripping off Wisconsin renters.”
If passed, the bill could be the first statewide law of its kind. While artificial intelligence and algorithm regulations lag behind their rapid development, this legislation would introduce new restrictions to a largely unregulated sector.
Ty Javier is a senior staff writer and photographer at The Daily Cardinal. He is an Economics major and has specialized in university and campaign finances, economic policy and transit.
