Algorithmic devices that set rent are prohibited in San Francisco

Legislation adding Section 37.10C to the Rent Ordinance went into effect on October 14, 2024. The law prohibits the sale or use of algorithmic devices to set rents or manage occupancy levels for residential units in San Francisco. 

An ''algorithmic device" is a device that uses one or more algorithms to perform calculations of "non-public competitor data" concerning local or statewide rents or occupancy levels, for the purpose of providing a landlord with recommendations on whether to leave a unit vacant or on what rent to charge.

Algorithmic devices are commonly known as revenue management software. 

"Non-public competitor data" means information that is not available to the general public, including: 

• Information about actual rent prices
• Occupancy rates
• Lease start and end dates
• Other similar data

It is unlawful to sell, license, or otherwise provide to San Francisco landlords any algorithmic device that sets, recommends, or advises on rents or occupancy levels that may be achieved for residential units in San Francisco.

It is unlawful for a landlord to use an algorithmic device:

• When setting rents or occupancy levels for residential dwelling units
  in San Francisco 
  • Each separate month that a violation exists or continues is a separate and distinct violation 
  • Each separate residential unit for which the landlord used the algorithmic device, is a separate and distinct violation
• Does not prohibit the use or sale of software that assists landlords with managing their units in general.

These are the available remedies when someone violates the prohibition on the sale or use of algorithmic devices:

• The City Attorney may file a civil action for: 
  • Money damages
  • Injunctive relief
  • Restitution/return of illegal profits
  • Civil penalties of up to $1,000 per violation
  • Reasonable attorney's fees and costs to the City Attorney if the City Attorney is the prevailing party
     
• A tenant may file a civil action for:
  • Money damages
  • Injunctive relief 
  • Civil penalties of up to $1,000 per violation 
  • Reasonable attorney's fees and costs to the tenant if the tenant is the prevailing party
    • A lease provision that limits a prevailing tenant from obtaining attorneys' fees is not enforceable

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