Judge tosses lawsuit alleging Zillow deceived home shoppers
Published in Business News
A federal judge has thrown out the central claims in a lawsuit alleging that Zillow illegally deceived home shoppers into working with certain real estate agents.
The case, filed in September, said that prominent buttons on Zillow’s website inviting browsers to “Contact agent” or “Request a tour” make home shoppers assume they’re contacting the house’s listing agent when in fact they’re being routed to Zillow-affiliated buyer’s agents.
When those agents are part of Zillow’s “Flex” program, they pass as much as 40% of their commission onto Zillow without disclosing that to homebuyers, limiting homebuyers’ ability to negotiate a lower price on the house or a lower commission rate, the case contended. The company also pressures those agents to direct buyers to Zillow Home Loans, Zillow's mortgage lender, according to the lawsuit. With nearly a dozen homebuyers listed as plaintiffs, attorneys sought class-action status for the lawsuit.
U.S. District Judge James Robart of the Western District of Washington found this week that homebuyers lacked standing to sue. The judge pointed out that, in addition to encouraging viewers to contact a Zillow-affiliated agent, Zillow’s website also displays a property’s listing agent. The company’s Terms of Use section explicitly and conspicuously discloses” that it connects customers to Zillow-affiliated agents, Robart wrote.
The case failed to show how Zillow’s practices “actively undermined the home-buying process, restricted informed lender choice, or eroded trust in real estate professionals,” Robart wrote.
The case also failed to show that commissions for Flex agents were higher than for non-Flex agents, driving up costs for consumers, the judge found.
The Seattle-based real estate listings giant called the original claims completely baseless.”
“Zillow’s tools are free, optional and transparent — buyers choose how and whether to use them,” the company said in a statement this week.
Robart gave the plaintiffs the chance to file an amended complaint to try to keep the case alive. That filing is likely in the coming weeks.
“We believe that many of the issues cited by the court are able to be addressed easily in an amended complaint, which is what we intend to file in three weeks,” Steve Berman, an attorney representing the plaintiffs, said in a statement.
“This case is not over,” Berman said.
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