The Real Deal New York

Consumer watchdog rules out legal action of Zillow ad program

CFPB ended probe of co-marketing program by listings giant
By E.B. Solomont | June 25, 2018 11:41AM

Zillow’s Spencer Rascoff and Mick Mulvaney (Credit: Getty Images)

The Consumer Financial Protection Bureau will not take legal action against Zillow Group over potential kickbacks in its co-marketing program, the Seattle-based listings giant said Monday.

The consumer watchdog, which opened an investigation in 2015, ended its probe of a program that lets agents and lenders share marketing costs. The CFPB had been looking at allegations that the program violated the Real Estate Settlement Procedures Act (RESPA), which prohibits business referrals in exchange for kickbacks.

“On June 22, 2018, the Company received a letter from the Bureau stating that it had completed its investigation, that it did not intend to take enforcement action, and that the Company was relieved from the document-retention obligations required by the Bureau’s investigation,” Zillow said in a regulatory filing.

The program, which started in 2013, is part of Zillow’s lucrative Premier Agent program. Premier Agents who pay for advertising can have part of their fees paid for “Premier Lenders.”

The CFPB threatened Zillow with legal action earlier this year, but in August, Zillow said that it was in settlement talks with the bureau. In January, Zillow was sued by shareholder Melvyn Klein who alleged that the company failed to disclose the probe. (The suit is ongoing.)

In a statement Monday, Zillow welcomed the conclusion of the CFPB probe: “As we have said before, it is long-standing practice for agents and lenders to advertise together, and we are glad they can continue to do so through Zillow Group’s advertising platform,” the company stated.

The CFPB, meanwhile, is grappling with political fallout under Mick Mulvaney, the acting director of the CFPB. Last year, Mulvaney, who is also the White House budget director, said the bureau is “trampling on capitalism.” This month, he fired the agency’s 25-member Consumer Advisory Board after some members criticized his leadership.