Judge consolidates RESPA lawsuits against Zillow in Seattle court

Although 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, the first was filed by homebuyer Alucard Taylor in mid-September. The lawsuit alleges that the portal misleads consumers into using agents affiliated with Zillow through its Flex and Premier Agent programs, resulting in high 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 inducing homebuyers to apply for more expensive loans that do not serve their best interests. The amended complaint includes testimony from twelve additional witnesses, who allege that Zillow employees fly into real estate offices to personally instruct Zillow Flex agents on the need to meet Zillow Home Loans (ZHL) quotas to prevent things from being put in writing, and that Zillow loan officers often misrepresent or omit important details about borrowers’ actual closing costs, causing buyers to pay excessive costs or lose the home

Taylor is represented by Steve W. Berman, a named partner in a class action lawsuit Hagens Berman Sobol Shapiro LLPthe same firm that represented the plaintiffs in the Moehrl Commission case.

The Armstrong Trial

The indictment against Armstrong, filed in early November, alleges that Zillow used illegal kickbacks to support the rapid growth of its ZHL mortgage business.

According to the complaint, Zillow pressures agents in its Premier Agent and Flex lead programs to send buyers to Zillow Home Loans for pre-approval of their purchase mortgage. Allegedly, agents who sent more customers to Zillow’s mortgage department for their pre-approval received additional or higher quality leads in return. If agents in the Flex program fail to send enough leads to ZHL for pre-approval, they are at risk of being removed from the program.

A Zillow spokesperson has since clarified that there are a number of factors that Zillow takes into account and that there are several requirements an agent must meet to be part of the Zillow Flex program. Zillow said it examines this list of factors when considering whether 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 other laws.

“Our approach prioritizes transparency and consumer choice so that consumers get the information and services they want and ask for at the right time during their real estate journey,” a Zillow spokesperson wrote in an email responding to these allegations. “Through our strong partnerships with real estate agents, continued product innovation and steadfast consumer advocacy, we continue to set a high standard for responsible engagement in the real estate industry.” These lawsuits are just two of eight Zillow is currently facing, including notable lawsuits with both Compass, CoStar Group and the Federal Trade Commission (FTC).