The Minneapolis City Council passed an ordinance Thursday that prohibits corporate landlords from using algorithm devices to set rental rates.
Council President Elliot Payne says the ordinance will protect renters now - and in the future.
"You don't need to wait and see to see that it is not going to be feasible to manage a rental property without having this type of technology in the future," says Payne. "And you also don't need to do a lot of guesswork to realize that the existence of mom and pop landlords will go away under this paradigm."
The move follows recent bans in San Francisco and Philadelphia that allows a "dynamic" pricing for rents based on vacancy and other factors. They analyze data to predict and recommend profit-maximizing rents, potentially leading to higher prices for renters and raising concerns about price-fixing and anti-competitive practices.
Supporters say the ordinance also makes sense because federal watchdogs groups that worked to prevent monopolization and price-fixing in rental properties no longer exist.
Councilmember Aurin Chowdhury says it's a way to protect renters from corporate greed.
"We no longer have a watchdog at the federal level as it comes to preventing monopolization and also things like price fixing," Chowdhury explained. "And so it makes a lot of sense for the City of Minneapolis right now to take action in offense to protect our renters but also protect the market."
Last August, the Justice Department, together with the Attorneys General of Minnesota, North Carolina, California, Colorado, Connecticut, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit against RealPage Inc. for what it said was an "unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments."
“Minnesotans and Americans everywhere increasingly understand that a big reason for inflation is corporate greed,” Attorney General Ellison said last year. “It’s hard enough to afford your life — and when illegal behavior makes it hard to afford the basics like housing and food while corporate profits skyrocket, I will step in to stop it."
In February, Minnesota U.S. Senator Amy Klobuchar (D) and other Democratic lawmakers introduced antitrust legislation to take on the algorithmic price fixing saying it would bring down costs.
“We constantly interact with algorithms in our daily lives but we've got to draw the line when they're actually being used to fix prices," says Klobuchar. "That’s why I’m working to pass legislation on the federal level to prevent companies from using algorithms to collude to set higher rent prices.”
The ordinance in Minneapolis was approved by an 11-2 vote. It now goes to Mayor Jacob Frey's office for approval.