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Zillow wins dismissal of RESPA claims in Flex referrals case

Created at 28 Jul · 2:56 PM1 source↑ Market-relevant
IN SHORT

A federal judge dismissed claims of Real Estate Settlement Procedures Act (RESPA) and racketeering violations against Zillow. The court found the plaintiffs' complaint lacked sufficient factual allegations and standing.

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Key Numbers

August 17deadline for amended complaint

Who's Involved

James Robart
Seattle-based federal court judge
Zillow
Real estate company facing lawsuit
Taylor and Armstrong
Plaintiffs in consolidated lawsuit
Real and The Frano Team
Defendants voluntarily dismissed from lawsuit
eXp Realty
Defendant with pending claims
GK Properties
Defendant dismissed due to time-barred claims
Zillow wins dismissal of RESPA claims in Flex referrals case

↳ Why This Matters

The dismissal represents a significant legal victory for Zillow, shielding it from potential liability related to its referral programs and mortgage services, and potentially setting a precedent for similar future litigation.

Key facts

  • A federal judge dismissed RESPA and racketeering claims against Zillow.
  • The court cited a lack of factual allegations and standing in its ruling.
  • Plaintiffs alleged Zillow tricked consumers into using affiliated agents and more costly loans.
  • The lawsuit claimed Zillow pushed buyers towards Zillow Home Loans for pre-approvals.
  • The court found that plaintiffs lacked standing for RESPA claims as they did not pay the fees in question.
  • The court found RICO claims failed to specify who committed fraud and how defendants participated.

A federal judge has dismissed claims of Real Estate Settlement Procedures Act (RESPA) and racketeering violations against Zillow. U.S. District Judge James Robart granted Zillow's motion to dismiss the consolidated Taylor and Armstrong lawsuit, stating that the complaint lacked sufficient factual allegations to meet the standards for the claims made.

The lawsuit, originally filed in September 2025, alleged that Zillow used its Flex and Premier Agent programs to steer consumers toward affiliated agents and more costly loans, leading to inflated home prices. An amended complaint in November added allegations that Zillow violated the Racketeer Influenced and Corrupt Organizations (RICO) Act by pushing homebuyers toward loans that did not serve their best interests.

In January, plaintiffs filed a further amended complaint, adding Real and The Frano Team as defendants and reiterating claims of inflated prices. In April, eXp Realty was added, accused of supporting Zillow's alleged "fraudulent business enterprise" by steering clients to Zillow Home Loans.

Judge Robart found that the RICO claims failed to specify who committed fraudulent acts, what communications were fraudulent, how they were fraudulent, and how the defendants participated. He also determined that the plaintiffs' claim of an unlawful enterprise between Zillow and brokerages was merely an ordinary business relationship. For the RESPA claims, the court ruled that the plaintiffs lacked standing because they did not pay the fees in question, as these fees were part of the seller broker's compensation split with the buyer's broker under the cooperative compensation model in place when the properties were purchased in 2022.

Furthermore, the judge found that for both RESPA and RICO claims, the plaintiffs failed to demonstrate how they were injured, including how Zillow Flex led to increased home prices or how using a Zillow Home Loan product caused financial harm. Zillow, in a statement, praised the dismissal of the "baseless complaint." The court has permitted the plaintiffs to file an amended complaint by August 17. The Real Brokerage and The Frano Team were voluntarily dismissed earlier this year, and GK Properties was dismissed due to time-barred claims. Claims against eXp Realty remain pending.

Frequently asked questions

Plaintiffs alleged Zillow violated the Real Estate Settlement Procedures Act (RESPA) and the Racketeer Influenced and Corrupt Organizations (RICO) Act by tricking consumers into using affiliated agents and more costly loans, leading to inflated home prices and financial harm.

The judge found the complaint lacked sufficient factual allegations, standing for RESPA claims, and specific details regarding fraudulent acts and participation for RICO claims. The court also stated the plaintiffs failed to show how they were injured.

Zillow, The Real Brokerage, The Frano Team, and GK Properties were dismissed. Claims against eXp Realty are still pending.

What Happens Next

01Plaintiffs may file an amended complaint by August 17.

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Cadence

How It Developed

A lawsuit was filed against Zillow alleging it tricks consumers into using affiliated agents and more costly loans.
The lawsuit was consolidated with a second suit claiming Zillow pressures agents to steer buyers to Zillow Home Loans.
Plaintiffs amended their complaint, adding Real and The Frano Team as defendants.
eXp Realty was added as a defendant, accused of supporting Zillow's alleged fraudulent enterprise.
A federal judge granted Zillow's motion to dismiss RESPA and racketeering claims.
The court found the complaint lacked sufficient factual allegations and standing for the RESPA claims.
The court found the RICO claims failed to identify necessary information about fraudulent acts and participation.
Zillow lauded the judge's dismissal of the 'baseless complaint'.

Sources

T1
Zillow wins dismissal of RESPA claims in Flex referrals caseHousingWire

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