Zillow Faces Allegations of Steering Buyers to Zillow Home Loans
In early November, the Armstrong suit alleged that Zillow pressures agents in its Premier Agent and Flex lead programs to direct buyers to Zillow Home Loans for their purchase mortgage pre-approval. Agents who sent more clients to Zillow’s mortgage arm supposedly received extra or higher-quality leads.
An amended complaint filed in early January reiterated claims that Zillow tricks consumers into using agents affiliated with Zillow through its Flex and Premier Agent programs, resulting in inflated home purchase prices.
Zillow argues that the plaintiffs’ claims should be dismissed for various reasons, including lack of evidence of harm caused by Zillow’s practices. Zillow maintains that buyers voluntarily chose to work with agents and some plaintiffs did not use Zillow Home Loans for their mortgage. The company also asserts that it disclosed information clearly to consumers and that many claims were filed after the one-year deadline for federal RESPA claims.
Zillow refutes the RESPA claims, stating that buyers were free to choose other lenders and that pre-approval letters are free and optional, not considered “settlement services.” Regarding the RICO claim, Zillow argues that no criminal enterprise or intent to defraud was proven.
A Zillow spokesperson stated, “The claims in this lawsuit are false and fundamentally mischaracterize how our business operates. Zillow is committed to empowering consumers with information and choice.”
In a blog post, Zillow suggested that the lawsuit may be driven by competitors seeking to deflect from their own challenges.
Legal claims against Zillow range from copyright infringement to antitrust violations, adding to the company’s current legal challenges.