The Armstrong lawsuit, first filed in early November, made similar allegations, alleging that 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.
In an amended complaint filed in early January in the consolidated lawsuit, plaintiffs again alleged that Zillow deceived consumers into using agents affiliated with Zillow through its Flex and Premier Agent programs, resulting in inflated home purchase prices.
In its motion, Zillow argues that the plaintiffs’ claims should be dismissed for several reasons. Indeed, Zillow believes that the plaintiffs never show how they were harmed by Zillow’s “contact agent” button or pre-approval letters, as Zillow notes in the filing that the buyers voluntarily cooperated with the agents and that some plaintiffs did not use Zillow Home Loans for their mortgage. Zillow also claims that it clearly disclosed everything to consumers and that many of the plaintiffs’ claims were filed after the one-year deadline for federal RESPA claims.
In addition, Zillow opposes plaintiffs’ RESPA claims, alleging that there was no illegal “referral” because buyers were free to choose other lenders and that plaintiffs did not pay for pre-approval letters, which are free, optional and not defined as “settlement services” under the law. Similarly, with respect to plaintiffs’ RICO claim, Zillow states that no evidence of a criminal enterprise or intent to defraud has been presented and no specific fraudulent acts have been identified.
“The allegations in this lawsuit are false and fundamentally characterize the way our company operates,” a Zillow spokesperson wrote in a statement. “Zillow is built around providing consumers with information and choice, and our programs reflect that commitment. Through trusted local agents, clear accountability and tools, we work with partners to help buyers understand what they can afford and deliver strong results for consumers, while ensuring they remain in control every step of the way. We stand by our business model and we will vigorously defend against these meritless allegations.”
Additionally, the company said in a blog post about the motion that it has “strong reason to believe the lawsuit is being driven by competitors seeking to deviate from their own challenges.”
This lawsuit is just one of many lawsuits currently affecting Zillow, with legal claims ranging from copyright infringement to antitrust violations.
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