As if rent wasn’t expensive enough, a new lawsuit claims that some landlords have been working together to push prices even higher.
What happened: The class-action lawsuit alleges that over a dozen Canadian landlords and property managers have used an AI software called YieldStar to share their pricing data with each other and inflate rental prices in lockstep.
- The proposed lawsuit mirrors a suit filed by the U.S. Department of Justice in August arguing that YieldStar allows landlords to align their rents and sidestep competition.
- Canadian Innovation Minister François-Philippe Champagne said in October that the government would launch an investigation into the allegations of price fixing.
Why it matters: Average rents in Canada have been found to be higher in buildings that use the software. The company’s own marketing material boasted about a Canadian pilot project where buildings using YieldStar made up to 4% more in rental revenue than others.
- A ProPublica investigation found that the software will even recommend that landlords accept fewer tenants to drive up demand and raise rents higher.
Bottom line: None of the allegations have been proven in court, but if the claims of collusion and price fixing are true, experts say the landlords could be facing criminal charges.—LA