STOP ALGORITHMIC PRICE-FIXING

Rent in Bellingham is already too expensive. We do not need something else driving up prices here. Banning algorithmic price fixing is a common sense protection against rent hikes that our market can’t sustain.

  • City of Bellingham 

    Initiative 26-01 

    Prohibition of Algorithmic Price-Fixing in the Rental Market 

    This measure would prohibit two or more landlords from entering into an agreement to establish rental prices, prohibit the use of paid algorithmic coordinating services that use systems or software to analyze public and private data about the rental market to recommend rental prices, lease renewal terms, or occupancy levels to multiple landlords, create a private right of action, establish whistleblower and anti-retaliation protections for tenants and employees, and authorize civil and criminal penalties. 

    Should this measure be enacted into law? Yes/No


  • AN INITIATIVE OF THE VOTERS OF THE CITY OF BELLINGHAM PROHIBITING ALGORITHMIC PRICE-FIXING IN THE RENTAL MARKET 

    WHEREAS the crisis of high housing costs, driven by decades of underinvestment in public housing and exclusionary zoning, is harming Bellingham residents; and 

    WHEREAS on a national and regional level, this crisis has been worsened by anti-competitive pricing by third-party coordinating services using competitively sensitive, non- public data; and 

    WHEREAS former Washington State Attorney General Bob Ferguson joined with the Department of Justice and seven other states attorneys general to file suit against RealPage for violations of the Sherman Act; and 

    WHEREAS the Biden White House published research finding that algorithmic price-fixing cost renters an average of $70 per month and estimate a cost to Americans totaling $3.8 billion in 2023; and 

    WHEREAS industry benefits from clear and well-defined rules. Regulation by litigation based on broad anti-trust statutes is inefficient, insufficient to protect tenants, and unpredictable for the rental industry; and 

    WHEREAS this initiative is substantially similar to protections adopted in Seattle and King County, and regional housing providers will be familiar with how to conform to such regulations; and 

    WHEREAS algorithmic price fixing is currently not known to be a common practice in Bellingham, meaning most local providers will not need to expend resources to be in compliance; and 

    WHEREAS this initiative will help ensure that Bellingham renters are not harmed in the future by this emerging nationwide practice of algorithmic price fixing; and 

    WHEREAS prohibiting anti-competitive price coordination is compatible with and complements other strategies to restore housing affordability; and 

    WHEREAS the protections for whistleblowers in this initiative increase the likelihood that future violations will be detected and remedied; and 

    WHEREAS several local jurisdictions, including King County and Seattle, as well as the State of California have led the way in prohibiting such anti-competitive conduct in the rental market.

    NOW THEREFORE, THE VOTERS OF THE CITY OF BELLINGHAM DO ORDAIN: A new chapter is added to the Bellingham Municipal Code, to read as follows: Section 1. Definitions. 

    For the purposes of this chapter: 

    "Coordinating Services" means collecting historical, anticipated, or contemporary prices, price changes, supply levels, occupancy rates, or lease or rental contract termination and renewal dates of residential dwelling units from two or more landlords, from private databases, or from public databases and then analyzing or processing such information through the use of a system or software that utilizes an algorithmic or other automated process to provide recommendations regarding rental prices, lease renewal terms, or occupancy levels to more than one landlord.  

    "Coordinating Services" does not include publishing rental price estimates that are solely based on publicly available information, are equally available to all members of the public, and do not require a contract or agreement to obtain. 

    "Coordinating Service Provider" means a person that performs a coordinating service. 

    “Landlord” has the same meanings as in RCW 59.18.030(16) for residential rentals, and RCW 59.20.030(7) for manufactured rentals. 

    “Tenant” has the same meanings as in RCW 59.18.030(34) for residential rentals, and RCW 59.20.030(28) for manufactured rentals. 

    "Person" means an individual, firm, corporation, association, governmental entity, or partnership and its agents or assigns. 

    Section 2. Prohibited Conduct. 

    A. It is a violation of this chapter for two or more landlords to enter into an agreement, including but not limited to written, verbal, or implied from conduct, to establish rental prices. 

    B. It is a violation of this chapter for a landlord, in or affecting commerce, to contract with or otherwise exchange anything of value in return for the coordinating service of a coordinating service provider.

    C. It is a violation of this chapter for a service provider, in or affecting commerce, to provide coordinating services to two or more landlords. 

    D. Separate Violations. Each dwelling unit affected, and each year that a violation of this chapter is continued, may be considered a separate violation. 

    E. It is not a violation of this chapter for a landlord to: 

    1. Use a system or software recordkeeping tool absent otherwise prohibited conduct under this chapter; 

    2. Generate or use a report, study, or presentation that provides existing rental data in an aggregated manner but does not recommend rent prices, fees, or occupancy rates or other rental contract terms for future leases; or 

    3. Provide or use information for the purpose of conducting market research for project financing or for conducting an appraisal. 

    Section 3. Enforcement 

    1. Civil action remedy. Each person injured by a violation of this chapter may bring a civil action in a court of competent jurisdiction against a landlord or coordinating service provider for violating this chapter and if they prevail shall be entitled: 

    a. Damages up to $5,000 dollars per violation; 

    b. Three times actual damages incurred; and 

    c. Reasonable attorneys' fees and costs to any person injured by a violation of this chapter if that person is the prevailing party 

    2. Anti-Retaliation Protections for Tenants. No party shall retaliate against a tenant for taking any action to enforce or investigate their rights under this chapter. Any tenant alleging a violation of this chapter shall be entitled to the protections against and  remedies for retaliation under BMC 6.20. 

    3. Action by the City Attorney Authorized. Complaints that any provision of this chapter has been violated may also be presented to the city attorney, who may investigate and, if they deem appropriate, initiate legal or other action to remedy any violation of this chapter.

    4. Civil Infraction. In addition to any other remedy provided by this chapter or allowed by law, any employer or their agent violating the requirement under this chapter shall have committed a civil infraction subject to the following penalties not to exceed the following amounts for the first offense, a fine of not more than $5,000.00 per violation. 

    5. Alternative Criminal Penalty. A second violation or a willful violation of this chapter may be considered a misdemeanor with a maximum penalty of $5,000, 90 days in jail, or both. 

    6. Joint and Several Liability. Responsibility for violation of this chapter are joint and several, and the City is not prohibited from taking action against a person where other persons may also be potentially responsible persons, nor is the City required to take action or the same actions against all potentially responsible persons. 

    7. Whistleblower Protections. An employer, or any person acting on behalf of the employer, shall not make, adopt, or enforce any rule, regulation, or policy preventing an employee from taking any of the following actions if the employee has reasonable cause to believe there has been a violation of this chapter or of a state or federal statute prohibiting the same or similar conduct: 

    a. Disclosing that information to a government or law enforcement agency, a person with authority over the employee, or another employee who has authority to investigate or correct the alleged violation. 

    b. Providing information to any public body conducting an investigation, hearing, or inquiry of an alleged violation, including testifying in a proceeding. 

    c. This section applies regardless of whether disclosing the information is part of the employee’s job duties. 

    d. This section and subsection 9 do not apply to rules, regulations, or policies that implement, or to actions by employers against employees who violate, the confidentiality of attorney-client privilege. 

    8. Anti-Retaliation Protections for Employees. An employer, or any person acting on behalf of the employer, shall not retaliate against an employee or an employee’s family member for disclosing information, or because the employer believes that the employee disclosed or may disclose information, related to a violation of this chapter or of a state or federal 

    statute prohibiting the same or related conduct.

    a. There shall be a rebuttable presumption of retaliation if an employer takes an adverse action against an employee within 180 days of disclosing information related to an alleged violation. Proof of retaliation under this chapter shall be sufficient upon a showing that an employer or any other person has taken an adverse action against a person and the person’s exercise of rights protected in this chapter was a motivating factor in the adverse action, unless the employer can prove that the action would have been taken in the absence of such protected activity. 

    b. An employee alleging retaliation in violation of this chapter shall be entitled to $7,500 in damages, reasonable attorney fees and costs, any additional relief in law or equity appropriate to remedy the violation. 

    Section 4. Miscellaneous Provisions. 

    A. Remedies under this chapter are in addition to any other existing legal remedies, and are not intended to be exclusive. 

    B. Nothing in this chapter eliminates an employee's rights under an employment contract, including if applicable, any binding code of conduct, or the rights to civil relief if that contract is violated. 

    C. The provisions of this chapter may not be waived in any private agreement, and any agreement that purports to waive any provision of this chapter are contrary to public policy, unenforceable, and void. 

    D. All provisions of this chapter should be read in harmony with state and federal law, and if there is any question or conflict between Bellingham and state law or federal law, state and federal law will apply. 

    E. This ordinance does not apply to short-term rentals or hotels/motels. 

    Section 5. Severability. 

    If any section, sentence, clause, phrase, or provisions of this chapter or its application to any person or circumstance is held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality

    of any other provision and the remainder of this chapter, or the application of such provisions to other persons or circumstances.

Frequently Asked Questions

  • Algorithmic price fixing occurs when multiple landlords use the same software to give them recommendations on what prices to set. These software tools have access to internal data from their clients, like occupancy rates, lease terms, and current pricing, and are able to use all this information to get a much more complete picture of a rental market than any individual landlord would normally have. They then leverage that information to tell a landlord the highest price they can charge while still filling their unit, and drive up prices by telling many landlords in the same market to raise their prices at the same time, meaning there is no competition keeping prices down.

  • Yes! Quite a few cities around the country have banned algorithmic price fixing in rentals, including Seattle and Portland. There was also an attempt in Washington’s legislature this year to implement a ban.

  • No. The language in this initiative is based on a proven model that was already successfully implemented in Seattle without major downsides. The language in Initiative 26-01 does not set any new limits to the prices landlords are allowed to set.

  • It’s hard to tell! The tricky thing about algorithmic price fixing is that landlords don’t have to report their use of these algorithms. In many jurisdictions where it is common, it doesn’t become known for several years. Whether this is a current practice or not, this initiative will protect tenants from a practice becoming more common across the country.

    26-01 also creates protections for whistleblowers who report the use of these algorithms, which will help get us a better idea of how they are being used going forward.

  • In the long term algorithmic price fixing drives up prices across the whole market, even in rentals where the landlord does not use it. Because price fixing drives up the price in so many units simultaneously, other landlords will eventually raise their prices to adjust to market averages. According to a nationwide report, where it is used, algorithmic price fixing raises the price of an average unit by $70, costing renters $3.8 billion in 2023 alone.