UPDATED: December 2, 1:42 p.m.: Trulia was slapped with a federal lawsuit assailing its Premier Agent advertising program as “unfair” and “deceptive,” and accusing it of diverting home buyers away from listing agents.
According to the suit, which seeks class-action status, the Zillow Group subsidiary connects buyers with agents who “have no actual connection to the property being advertised, other than having paid defendant to be presented prominently next to the property.”
The lawsuit, filed November 28 in Eastern District Court, compares Premier Agent to a broker who purchases a billboard to advertise a listing already held by a competitor.
The suit says neither Trulia nor its parent Zillow Group requires Premier Agents to obtain consent from the listing agent or firm to advertise alongside their listing. “Defendant’s practices make it less likely that a prospective homebuyer is able to successfully contact the listing agent instead of the Premier Agents,” the suit said.
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The suit seeks $5 million in damages on behalf of plaintiffs Andrew Kim, a licensed agent in Queens; John Doe, a broker who oversees six agents; and “all others similarly situated.”
It was filed by Long Island attorney Spencer Sheehan, who has been busy the past year suing food companies over their use of synthetic vanilla flavoring. (In 2019, Sheehan filed at least 27 lawsuits against the makers of ice cream, yogurt and cookies.)
In 2015, Sheehan represented former subway vigilante Bernhard Goetz, who was facing eviction from his apartment for keeping a pet squirrel.
Zillow, which acquired Trulia in a $2.5 billion deal in 2015, said in a statement that the claims in the lawsuit are without merit. “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,” said Viet Shelton, a company spokesman.
Premier Agent has roiled the real estate industry in New York City since Zillow-owned StreetEasy brought the program here in 2017. That year, the Real Estate Board of New York, having blasted Premier Agent for causing a “maelstrom” of consumer confusion, demanded an investigation into whether it was legal under state advertising laws.
This past January, Zillow launched Agent Spotlight, a program that lets listing agents avoid Premier Agent — for $333 a month.
But in May, New York regulators enacted stricter rules for online ads, requiring third-party sites to make clear when a broker is paying for an ad.
For years, Premier Agent has been responsible for the lion’s share of Zillow Group revenue. During the third quarter of 2019, Premier Agent generated $240.7 million, up 3 percent year-over-year.
But over the past year, Zillow has pivoted toward instant home-buying, which CEO Richard Barton has described as the company’s “moonshot.” During the third quarter, revenue from Zillow’s “Homes” segment surpassed that of agent advertising for the first time.
“It’s the size and strength of Premier Agent that allow us to invest in and expand Zillow Offers so quickly,” Barton said during an earnings call.