San Francisco First in Nation to Ban AI Rent Price-Fixing Software

San Francisco has become the first city in the United States to ban the use of artificial intelligence software designed for rental price-fixing. This decision follows the unanimous approval by the Board of Supervisors to prohibit algorithms that maximize rent charges for landlords.

A recent analysis by the New York Times highlighted concerns about AI-driven rent price-fixing, specifically targeting the practices of RealPage, a prominent software company. According to the report, landlords utilizing this software might not only increase rents but also keep units vacant based on profitability predictions. RealPage faces multiple lawsuits accusing the company of facilitating collusion and price-gouging.

San Francisco Supervisor Aaron Peskin’s office identified some of the city’s largest residential landlords, including Brookfield Properties, Greystar, Equity Residential, and UDR, Inc., as users of this controversial software.

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However, the usage of such AI tools is nearing its end in San Francisco. Bay City News reported that the Board of Supervisors’ unanimous vote on Tuesday marked the first step in banning AI rental-price software. Peskin, the author of the measure, celebrated the vote, stating, “Banning automated (AI) price-fixing will allow the market to work and bring down rents in San Francisco. We want to put more units on the market. Let’s be clear: RealPage has exacerbated our rent crisis and empowered corporate landlords to intentionally keep units vacant. So we’re taking action locally to ensure our working renters can afford to live here.”

RealPage’s YieldStar product, which leverages data analytics to suggest maximum rental prices by comparing competitors’ rates, has been particularly contentious. The company claims its software can help landlords “outperform the market 3% to 7%.” Despite these claims, RealPage declined to speak at a Board of Supervisors committee meeting discussing Peskin’s ban. Instead, they submitted a six-page data packet to counter the allegations.

The ban is not yet effective. A second reading and vote are required for final approval, which cannot occur until the Board of Supervisors reconvenes after its summer recess in August. The earliest this vote could take place is Tuesday, September 3.

Source: SFIST