WHAT THIS BILL REGULATES · 1 REQUIREMENT TYPE
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
(a)–(h) Renters make up a larger share of households in California at 44 percent, compared to the United States average of 35 percent, and California has a higher percentage of renters compared to any other state other than New York, which has a rate of 46 percent. (b) California's median rent is two thousand eight hundred dollars ($2,800), which is 40 percent higher than the national median. In the City of Los Angeles, the median rent is two thousand eight hundred dollars ($2,800), while in the City and County of San Francisco, the median rent is three thousand two hundred eighty-five dollars ($3,285). (c) Recently, algorithmic pricing software has disrupted rental housing markets in cities nationwide. (d) Algorithmic pricing technology uses proprietary lease information to gather and share rent data, setting prices that can inflate rents and vacancy rates. The public sharing of vast amounts of proprietary data can harm renters by calculating and recommending rent and occupancy levels. (e) Algorithmic pricing software has led to double-digit rent increases, higher vacancy rates, and more evictions, distorting markets by causing both rents and vacancy rates to rise simultaneously. (f) Often used by large corporate landlords, algorithmic pricing software promotes the consolidation of corporate and private equity ownership of rental housing. This occurs at the expense of landlords, both large and small, who adhere to standard practices, thereby suppressing competition and creating an unfair market advantage. (g) Investigations have been launched recently into the use of algorithmic pricing software. California and seven other states joined the United States Department of Justice's antitrust lawsuit, alleging that an algorithmic intermediary collects, combines, and exploits landlords' competitively sensitive information, causing renters to pay inflated prices. (h) Local governments in California have introduced ordinances to ban the use of algorithmic rent pricing software to protect renters from potential market manipulations.
Section 1 recites legislative findings on the impact of algorithmic pricing software on California's rental housing market. The findings note that California's 44 percent renter rate is second only to New York, that the state's median rent is 40 percent above the national median, and that algorithmic pricing tools have led to double-digit rent increases, higher vacancy rates, and more evictions. The section references the DOJ antitrust lawsuit joined by California and seven other states alleging that an algorithmic intermediary exploited landlords' competitively sensitive information.
These findings provide the policy rationale for the operative prohibitions in Section 2 but do not themselves create compliance obligations.
(a) 1 It is unlawful for any person to sell, license, or otherwise provide to two or more persons a rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3) with the intent that it be used by two or more persons in the same market or a related market to set or recommend rental rates, lease terms, or occupancy levels for residential premises.
(b) 2 It is unlawful for any person to use a rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3) to set rental rates, lease terms, or occupancy levels for residential premises if the person knew or should have known that another person in the same or related market used or will use the rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3) to set rental rates, lease terms, or occupancy levels for a residential premises.
(c) 3 A person engaged in the business of providing a rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3) that is used to set or recommend rental rates, lease terms, or occupancy levels for residential premises, and that is not otherwise prohibited under subdivision (a), shall not use nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data, including information about actual rental rates, lease terms, occupancy rates, and similar data, regardless of whether the information is attributable to a specific competitor or anonymized, and regardless of whether the information is derived from or otherwise provided by another person that competes in the same or a related market. "Nonpublic competitor data" does not include any of the following: (i) Information regarding actual rent amounts charged to a tenant, occupancy rates, and lease start and end dates that are obtained from the following publicly accessible sources: (I) Advertisements of available rental properties, including listings published on internet websites maintained by a property owner or manager. (II) Rental registries maintained by a city, county, city and county, or state or federal agency. (ii) Information obtained from the United States Census Bureau or State Census Data Center. (iii) Aggregated information distributed, reported, or otherwise communicated in a way that is not reasonably linkable to a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results, provided that such aggregated information is not derived from sources which may be considered nonpublic competitor data. (iv) Other forums, including internet websites, in which information about actual rent amounts charged to a tenant, occupancy rates, or lease start and end dates is equally accessible to tenants or prospective tenants and landlords.Civ. Code § 1947.16(e)(1) pertaining to residential premises in the state.
(d) Each month that a violation exists or continues, and each residential premises for which the person uses the rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3), shall constitute a separate and distinct violation.
(e) The following definitions apply for purposes of this section: (1) (A) "Nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data, including information about actual rental rates, lease terms, occupancy rates, and similar data, regardless of whether the information is attributable to a specific competitor or anonymized, and regardless of whether the information is derived from or otherwise provided by another person that competes in the same or a related market. "Nonpublic competitor data" does not include any of the following: (i) Information regarding actual rent amounts charged to a tenant, occupancy rates, and lease start and end dates that are obtained from the following publicly accessible sources: (I) Advertisements of available rental properties, including listings published on internet websites maintained by a property owner or manager. (II) Rental registries maintained by a city, county, city and county, or state or federal agency. (ii) Information obtained from the United States Census Bureau or State Census Data Center. (iii) Aggregated information distributed, reported, or otherwise communicated in a way that is not reasonably linkable to a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results, provided that such aggregated information is not derived from sources which may be considered nonpublic competitor data. (iv) Other forums, including internet websites, in which information about actual rent amounts charged to a tenant, occupancy rates, or lease start and end dates is equally accessible to tenants or prospective tenants and landlords.Civ. Code § 1947.16(e)(1)" means nonpublic dataNonpublic data"Nonpublic data" means information that is not widely available or easily accessible to the public, including public-facing data made available under terms of service that prohibit the use of that data.Civ. Code § 1947.16(e)(2), including information about actual rental rates, lease terms, occupancy rates, and similar data, regardless of whether the information is attributable to a specific competitor or anonymized, and regardless of whether the information is derived from or otherwise provided by another person that competes in the same or a related market. (B) "Nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data, including information about actual rental rates, lease terms, occupancy rates, and similar data, regardless of whether the information is attributable to a specific competitor or anonymized, and regardless of whether the information is derived from or otherwise provided by another person that competes in the same or a related market. "Nonpublic competitor data" does not include any of the following: (i) Information regarding actual rent amounts charged to a tenant, occupancy rates, and lease start and end dates that are obtained from the following publicly accessible sources: (I) Advertisements of available rental properties, including listings published on internet websites maintained by a property owner or manager. (II) Rental registries maintained by a city, county, city and county, or state or federal agency. (ii) Information obtained from the United States Census Bureau or State Census Data Center. (iii) Aggregated information distributed, reported, or otherwise communicated in a way that is not reasonably linkable to a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results, provided that such aggregated information is not derived from sources which may be considered nonpublic competitor data. (iv) Other forums, including internet websites, in which information about actual rent amounts charged to a tenant, occupancy rates, or lease start and end dates is equally accessible to tenants or prospective tenants and landlords.Civ. Code § 1947.16(e)(1)" does not include any of the following: (i) Information regarding actual rent amounts charged to a tenant, occupancy rates, and lease start and end dates that are obtained from the following publicly accessible sources: (I) Advertisements of available rental properties, including listings published on internet websites maintained by a property owner or manager. (II) Rental registries maintained by a city, county, city and county, or state or federal agency. (ii) Information obtained from the United States Census Bureau or State Census Data Center. (iii) Aggregated information distributed, reported, or otherwise communicated in a way that is not reasonably linkable to a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results, provided that such aggregated information is not derived from sources which may be considered nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data, including information about actual rental rates, lease terms, occupancy rates, and similar data, regardless of whether the information is attributable to a specific competitor or anonymized, and regardless of whether the information is derived from or otherwise provided by another person that competes in the same or a related market. "Nonpublic competitor data" does not include any of the following: (i) Information regarding actual rent amounts charged to a tenant, occupancy rates, and lease start and end dates that are obtained from the following publicly accessible sources: (I) Advertisements of available rental properties, including listings published on internet websites maintained by a property owner or manager. (II) Rental registries maintained by a city, county, city and county, or state or federal agency. (ii) Information obtained from the United States Census Bureau or State Census Data Center. (iii) Aggregated information distributed, reported, or otherwise communicated in a way that is not reasonably linkable to a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results, provided that such aggregated information is not derived from sources which may be considered nonpublic competitor data. (iv) Other forums, including internet websites, in which information about actual rent amounts charged to a tenant, occupancy rates, or lease start and end dates is equally accessible to tenants or prospective tenants and landlords.Civ. Code § 1947.16(e)(1). (iv) Other forums, including internet websites, in which information about actual rent amounts charged to a tenant, occupancy rates, or lease start and end dates is equally accessible to tenants or prospective tenants and landlords. (2) "Nonpublic dataNonpublic data"Nonpublic data" means information that is not widely available or easily accessible to the public, including public-facing data made available under terms of service that prohibit the use of that data.Civ. Code § 1947.16(e)(2)" means information that is not widely available or easily accessible to the public, including public-facing data made available under terms of service that prohibit the use of that data. (3) "Rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3)" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3)" includes a product that incorporates a rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3). (B) "Rental pricing algorithmRental pricing algorithm"Rental pricing algorithm" means a service or product, including, but not limited to, an artificial intelligence, algorithmic program, or software tool, that uses one or more algorithms to analyze or process data regarding historical or contemporaneous rental rates, lease terms, or occupancy levels of residential premises. (A) "Rental pricing algorithm" includes a product that incorporates a rental pricing algorithm. (B) "Rental pricing algorithm" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.Civ. Code § 1947.16(e)(3)" does not include either of the following: (i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program.
(f)(1) The Attorney General, in the name of the people of the State of California, and the city attorney or county counsel in the jurisdiction in which the rental unit is located, in the name of the city or county, may file a civil action for a violation of this section for damages, injunctive relief, restitution, or civil penalties of up to one thousand dollars ($1,000) per violation, or any combination of those remedies. The court shall award reasonable attorney's fees and costs to the Attorney General, city attorney, or county counsel, as applicable, if they are the prevailing party in the action.
(f)(2) A person may file a civil action for a violation of this section for damages, injunctive relief, or civil penalties of up to one thousand dollars ($1,000) per violation, or any combination of those remedies. The court shall award reasonable attorney's fees and costs to the prevailing plaintiff in the action. A lease provision that limits a tenant from recovering attorney's fees shall not be enforceable against a tenant's claim for attorney's fees that arise under this paragraph.
(g)(1)–(2) Nothing in this section shall impair or limit the applicability of antitrust laws. The prohibitions described herein apply in addition to, and not in lieu of, any prohibitions described in applicable state or federal antitrust laws. (2) A violation of this section shall constitute an unlawful restraint on competition within the meaning of the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code) and an act of unfair competition within the meaning of the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code). The remedies and penalties provided by this section are cumulative to each other and the remedies or penalties available under all other laws of this state.
Section 1947.16 creates three distinct prohibitions targeting the use of algorithmic tools to coordinate residential rental pricing. Subdivision (a) targets the supply side: it is unlawful to sell, license, or provide a rental pricing algorithm to two or more persons with the intent that it be used by those persons in the same or related market. Subdivision (b) targets the demand side: it is unlawful for any person to use a rental pricing algorithm to set rental rates, lease terms, or occupancy levels if that person knew or should have known another person in the same or related market also uses it. Subdivision (c) imposes a data restriction on providers of rental pricing algorithms that are not otherwise prohibited under subdivision (a), barring them from using nonpublic competitor data pertaining to California residential premises.
The violation-counting rule in subdivision (d) is aggressive: each month a violation continues and each residential premises affected constitutes a separate and distinct violation, creating potentially enormous cumulative exposure. Subdivision (g) expressly provides that violations also constitute Cartwright Act antitrust violations — which carry criminal penalties — and UCL unfair competition, and that the bill's remedies are cumulative with all other state-law remedies.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
Section 3 is a standard state-mandated local program disclaimer. Because the bill expands the scope of the Cartwright Act (violation of which is a crime), it creates a state-mandated local program, but no reimbursement is required because the costs arise solely from the creation of a new crime within the meaning of Government Code § 17556 and Article XIII B, § 6 of the California Constitution.