By Jorge Casuso
March 7, 2025 -- The City Council on Tuesday will consider drafting an ordinance to ban the use of price-fixing software that may have been used to jack up rent prices in the LA area after the recent wildfires.
The proposed ordinance, which would return for Council approval within 60 days, would include "enforceable penalties for noncompliance," according to the item placed in the agenda by Councilmembers Caroline Torosis, Ellis Raskin and Dan Hall.
"In the wake of the January firestorms, which devastated communities and displaced many renters, the city is witnessing an alarming trend of rental price gouging in the region," the item states.
The destruction of more than 10,000 residential structures has led to a "surge in demand" for rental properties that has resulted in "significant rent hikes."
The Councilmembers note that "the Los Angeles Tenants Union identified over 500 property listings where monthly rents abruptly jumped, in some cases more than doubling."
"This crisis has been exacerbated by the use of algorithmic rental price-fixing software," the Counciilmembers wrote.
The item does not indicate whether any cases of "price gouging" have taken place in Santa Monica, and staff has indicated no violations of short-term rental laws ("City to Enforce Short-term Rental Laws," March 5, 2025).
The proposed ordinance would ban the use of software such as YieldStar and RealPage, "which allow landlords to share non-public, sensitive information about rental rates and occupancy.
"This data is used to generate pricing recommendations, which can lead to coordinated rent increases among competing landlords, effectively reducing competition and harming renters," the item states.
"Such practices undermine market competition, place renters at risk of financial hardship and displacement, and contradict the City's commitment to housing affordability."
The item notes that last August, the U.S. Justice Department, along with Attorneys General from several states, filed a civil antitrust lawsuit against the real estate software company RealPage and participating landlords.
It also notes that last March, the Federal Trade Commission (FTC) and DOJ filed a legal brief stating that "agreeing to use shared pricing recommendations or algorithms can be unlawful, even if competitors retain some pricing discretion."
In response to an amended filing by the Justice Department on January 7, RealPage said its "software was purposely built to be legally compliant" and that "the root cause of high housing costs is the under-supply of housing."
A few U.S. cities are cracking down on landlords who use the AI software to set rents after San Francisco became the first city to ban its use in July 2023.
San Diego -- where rents have increased 21 percent since 2020 -- was drafting a similar ordinance in December, according to CalMatters.
State lawmakers, however, failed to advance legislation last year "that would have banned the use of any pricing algorithms based on nonpublic data provided by competing companies," CalMatters reported.
