New York Governor **Kathy Hochul** signed a landmark bill on Thursday that prohibits landlords from using price manipulation software to set rents. This move makes New York the first state in the United States to ban landlords from using algorithmic pricing at the state level, following city-wide bans in cities such as Jersey City, Philadelphia, San Francisco, and Seattle.
Legal Definition of "Algorithmic Price Collusion"
The law focuses on combating landlords' use of software from companies like RealPage to set rents, ideal occupancy numbers, or lease renewal terms. Although RealPage claims its software helps clients "optimize rents to achieve maximum overall returns for each property," Governor Hochul pointed out that these "private data algorithms" have led to "distorted housing markets" during the "historic housing supply and affordability crisis," seriously harming tenants' interests.
The new law is strict because it not only prohibits the use of this software to set rental terms but also states that: any landlord who uses this software will be considered to be colluding. This means that two or more landlords or property managers who use algorithms to set rents, regardless of whether they are "intentional" or "willfully ignoring the consequences," will be considered as choosing not to compete with each other, and their actions will be treated as illegal.
Tenant Protection and Antitrust Actions
According to Governor Hochul's press release, this type of software is expected to cost U.S. renters approximately $3.8 billion by 2024. This legislation was introduced following a 2022 investigation by ProPublica that linked RealPage's algorithms to nationwide rent increases, and after the U.S. government subsequently filed a lawsuit against RealPage.
Pat Gallofaro, director of state and local policy at the American Economic Freedom Project, said the bill protects tenants from "algorithmic price collusion." One of the bill's sponsors, State Senator Brad Hoylman-Singer emphasized that this legislation "will update our antitrust laws, explicitly stating that manipulating rent prices through artificial intelligence is illegal."
This law will come into effect 60 days from now
