While both lawsuits were filed in U.S. District Court in Seattle and involve RESPA claims against Zillow, the details of the two cases have some notable differences.
Of the two lawsuits, Taylor was filed first by home buyer plaintiff Alucard Taylor in mid-September. The lawsuit alleges that the portal tricks consumers into using agents affiliated with Zillow through its Flex and Premier Agent programs, resulting in inflated home purchase prices.
In an amended complaint filed in mid-November, Taylor also alleged that Zillow violated the Racketeer Influenced and Corrupt Organizations (RICO) Act by pushing homebuyers to apply to more costly loans that do not serve their best interests. The amended complaint contains testimony from 12 additional witnesses, who claim that Zillow personnel fly to real estate offices to instruct Zillow Flex agents in person on the need to meet Zillow Home Loans (ZHL) quotas to avoid putting things in writing, and that Zillow’s loan officers frequently misrepresent or omit important details about borrowers’ true closing costs, leading buyers to pay excessive costs or lose the house
Taylor is being represented by Steve W. Berman, a named partner at class action litigation firm Hagens Berman Sobol Shapiro LLP, the same firm that represented plaintiffs in the Moehrl commission lawsuit.
The Armstrong lawsuit
Filed in early November, the Armstrong suit claims that Zillow used illegal kickbacks to bolster the rapid growth of its ZHL mortgage business.
According to the complaint, Zillow pressures agents in its Premier Agent and Flex lead programs to steer buyers to Zillow Home Loans for their purchase mortgage pre-approval. Allegedly, agents who sent more clients to Zillow’s mortgage arm for their pre-approvals received extra or higher-quality leads in exchange. If agents in the Flex program fail to send a sufficient number of leads to ZHL for pre-approval, they risk being removed from the program.
A Zillow spokesperson has since clarified that there are a number of factors Zillow considers and several requirements an agent must meet to be part of the Zillow Flex program. Zillow said that this list of factors is examined when considering to reduce the number of leads an agent receives, remove them from the program or increase the number of leads they receive.
Zillow has maintained that its practices do not violate RESPA or any other laws.
“Our approach prioritizes transparency and consumer choice, ensuring consumers receive the information and services they want and ask for at the right time throughout their real estate journey,” a Zillow spokesperson wrote in an email responding to these allegations. “Through our strong partnerships with real estate agents, ongoing product innovation and steadfast advocacy for consumers, we continue to set a high standard for responsible engagement across the real estate industry. ”These lawsuits are just two of eight that Zillow is currently facing, including notable lawsuits with both Compass, CoStar Group and the Federal Trade Commission (FTC).
