FTC Chair: ‘No AI exemption to the laws’ when it comes to setting rent prices

ATLANTA, Ga. (Atlanta News First) - Less than a week after the Federal Bureau of Investigation raided a property management company in Buckhead, the chair of the Federal Trade Commission reiterated from Atlanta that the federal government would not stand for collusion between large real estate firms to raise rental prices across the board.

After a seminar with local housing experts and advocates, FTC Chair Lina Khan said her agency was also working with other federal entities to combat emerging practices for raising rents in large metro areas like Atlanta.

“We’ve been hearing now more and more just how a whole set of underhanded tactics is making it more and more difficult for people to get a fair shake,” said Khan, speaking from the campus of Georgia Tech on Friday.

Cortland Management, the firm that was raided Monday, said they were not the targets of any federal probe, but were cooperating fully with the FBI and Department of Justice.

“We can confirm that the Federal Bureau of Investigation executed a limited search warrant at our Atlanta office as part of an ongoing investigation by the US Department of Justice into potential antitrust violations in the multifamily housing industry,” a spokesperson with Cortland told Atlanta News First in a statement. “We are cooperating fully with that investigation, and we understand that neither Cortland nor any of our employees are ‘targets’ of that investigation. Due to the ongoing litigation, we cannot comment further at this time.”

Khan said it’s part of a larger effort by the federal government to crack down on rapidly rising rent prices, and the use of artificial intelligence to inflate prices.

“These AI tools and algorithms can provide all sorts of benefits, but they can also create risk and they can also create opportunity for businesses to break the law through new tactics and new means,” said Khan.

“One thing that we at the Federal Trade Commission have been crystal clear about is that there is no AI exemption to the laws on the books,” she continued. “In the same way that price fixing is illegal if you’re kind of going in a back room and shaking hands, price fixing is still illegal if you’re doing it through an algorithm.”

The problem is this: only a small handful of corporations own the majority of rental properties in Atlanta. Across the five major metro counties, just three companies own 11% of apartments and single family homes for rent. Across the larger metro area, the same handful of companies own closer to 21% of rental properties available.

When they agree to raise prices across the board, sometimes using AI software, Khan says the impacts to renters can be detrimental and leaves them with no other cheaper options.

“We’re also closely monitoring how companies may be using AI and algorithms to collectively collude and collectively inflate prices for renters,” she added.

Atlanta News First spoke to one Cortland renter who said their rates have increased by 50% over the five years they lived in their current apartment. They wanted their identity concealed for privacy, and out of fear of retaliation.

“The biggest impact is feeling trapped,” they said. “It’s very uncomfortable. Tough place to be because when you look around and you want to have other options, there aren’t really other options.”

“You have one of two options, you either stay in Atlanta and pay these increased prices, or you move elsewhere,” they said. “You’re looking at thousands of dollars to move plus a $400-$500 increase per month to be able to live in a new place.”

Khan also said Friday that the FTC is looking at ways to crack down on, or eliminate, fees they said were hurting renters’ abilities to obtain housing – things like application and pet fees.

“Fees that you don’t really understand what they mean,” said Khan. “Administrative fees, risk fees, we just talked about pet fees; real dollars that add up for people.”

“We are also excited to know that there is some accountability to be held with the corporate and investor landlords that have just bombarded the state,” said Alison Johnson with the local advocacy group Housing Justice League, flanking Khan at the press conference.