Author: Scott Willson
Every proptech venture I have encountered during my travels throughout Australasia, South-East Asia and Europe has been launched with the best of intentions and by teams who really want to deliver positive and lasting change and drive efficiencies.
Sure, they also want to attract investment, grab market share and maybe one day deliver an exit plan, but on a daily basis, their most pressing agenda is improving their customers’ lives.
News that the US Department of Justice (DoJ) has launched an investigation into real estate technology firm, RealPage, is therefore a sobering read for many of us in the proptech arena. Allegations have recently surfaced via the investigative news service, ProPublica, that RealPage – a rental property management software provider – has been using client data to manipulate market pricing.
These allegations centre on how RealPage’s software uses the non-public rental rates gathered from its landlord clients, repackages that information in an anonymised form to make rental rate recommendations to its users, indirectly giving landlords access to their competitors’ pricing.
Arguably RealPage is adding value to its customers (landlords) by providing transparency via data aggregation, similar in principle to the concept of a public auction. Though in this instance it is alleged that Landlords have used that data aggregation/insight to raise rents, given a different set of macro drivers, it could have just as easily have pushed rents down. In an increasingly transparent, data driven world, it will be fascinating to see the DoJ argue against transparency, particularly in relation to price setting. The digital revolution is all about data driven decision making to better allocate resources and there are numerous examples of superfluous attempts to squash transparency when value is on offer.
But if these allegations are proven, it would appear that RealPage's rent-setting software has contributed to a coordinated, nationwide rent-rise and has aided a cartel of landlords that collude to increase prices.
Proptechs operating in the data space have an enormous burden of responsibility to their customers, their users, and the data entrusted in their service. The focus too often falls on privacy concerns – the correct, secure and proper handling of sensitive information. While important in its’ own right, this is a different concern to how customer data can (and may) be used. Indeed, there are many reputable proptechs operating on this trusted basis which makes the allegations all the more alarming, and puts at risk a commonly employed business model.
Landlords need to ensure they work with proptechs who take privacy concerns seriously and provide clarity on what customer data is used for and by who. At Forbury we have invested and continue to invest in all modern security including independent verification via third-party certification bodies (ISO27001).
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