A new federal class-action lawsuit filed in the United States District Court for the Southern District of New York is taking aim at Zillow’s Premier Agent advertising platform for real estate agents and brokerages.
Three law firms jointly filed the lawsuit – including the same firm that filed a similar suit against Zillow-owned Trulia earlier this month – on behalf of New York State agent Max Brizer and others who claim Premier Agent encourages dual agency and violates a state antitrust law and The Consumer Protection Act.
“Approximately 80 percent of prospective homebuyers use defendant’s website in beginning their home search,” the complaint reads. “This usage gives defendant’s platform ‘the power to tilt the real-world playing field in favor of its own favored counter-parties’ – ‘Premier Agents’ – who, unbeknownst to users, pay monthly fees to be associated with properties they have no connection to.”
“Defendant’s practices are unfair and deceptive towards traditional real estate brokers and listing agents and cause consumer confusion, economic harm and deception,” the complaint continues.
Through Zillow’s Premier Agent platform, agents can advertise buyers’ agent services in a box on the right side of Zillow’s listings, below the listing agent. The lawsuit claims the website’s design makes it improbable that consumers are going to contact the listing agent and will instead contact a Premier Agent.
Specifically, the lawsuit says Zillow’s platform encourages dual agency because the Premier Agents aren’t able to provide enough information about the listing that they have no connection to and will instead steer consumers towards listings being represented by themselves or their own brokerage.
“Premier Agents steer the prospective homebuyers to properties that are better financial arrangements for them as opposed to the homebuyers, and attempt to induce them into signing Buyer’s Agent Agreements or duel agency agreement to egregiously maximize their commission,” the complaint reads.
However, it’s not clear if the complainant’s argument is that prospective buyers should reach out to them, as the listing agent, for representation, which would also fall under dual agency.
The complaint also alleges that Premier Agent violates New York’s Donnelly Act, which is a state antitrust law that somewhat mirrors the federal Sherman Antitrust Act. The act, according to the New York State Attorney General’s Office, prohibits price-fixing, bid-rigging, territorial and customer allocations, monopolization, boycotts, and tying arrangements, among other practices.
“Defendant enables and promotes the Premier Agents to do indirectly what it cannot do directly – advertise to and solicit prospective homebuyers based on the listings supplied by other real estate brokers, without permission,” the complaint reads. “When a prospective homebuyer clicks on a webpage connected with a property listing and supplies their contact information, this information is directed to defendant’s employees, who screen them prior to being forwarded to Premier Agents.
“This is contrary to standard advertising practices purchasers who have an arms-length relationship with the platform where they buy advertising.”
In addition to claiming that Premier Agent violates the Donnelly Act, the complaint also alleges that Zillow’s business violates the state’s Consumer Protection from Deceptive Acts law, by inducing them into signing dual agency agreements and referring them to an agent with no connection to the property outside of advertising on it.
Viet Shelton, a spokesperson for Zillow, called the claims baseless and unsupported.
“The claims made in this suit are a replica of the meritless claims made a few weeks ago by the same lawyers, who use the same baseless and unsupported attacks against us,” Shelton said, before referring Inman to the original comment from December 2:
We are aware of the lawsuit. We believe the claims are without merit and intend to vigorously defend ourselves against the lawsuit.
Our site arms consumers with information that helps them make decisions when finding their next home, and that includes convenient and fast tools to connect with real estate professionals. This is why for-sale listings on Zillow and Trulia show the listing agent – for free – along with his or her contact information, profile, broker information, and a link for a consumer to use to contact the listing agent if they choose.
If a consumer wants to do more research, we provide them with the necessary information for this to happen, whether it be to work with the seller’s agent or contact a buyer’s agent on their own.
What’s more, our sites are a valuable marketing tool for agents listing their clients’ properties for sale because of the 200 million consumers who visit Zillow Group sites every month to buy, sell and look at real estate online, and that’s why the vast majority of brokerages and MLSs across the country want their listings on our sites.”
Read the full complaint below:
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