CFPB Investigates Zillow’s ‘Co-Marketing’ Ads

May 19, 2017

The Consumer Financial Protection Bureau reportedly is looking into whether some of Zillow’s advertising revenues violate regulations against kickbacks, MarketWatch reports.

The investigation centers around the Real Estate Settlement Procedures Act, known as RESPA, and how a real estate agent or lender gets business from a home buyer. RESPA prevents agents and lenders from funneling customers to one another in exchange for kickbacks or rewards.

The CFPB is investigating Zillow’s “co-marketing” plan, which allows a real estate agent to share the cost of an ad on its website with a preferred lender. It can make those lenders or agents appear as they are receiving approval from each other or from Zillow, MarketWatch reports.

The CFPB has requested additional information several times over Zillow’s “co-marketing” plan since 2015. Its most recent civil investigative demand came in April, MarketWatch reports.

“We are continuing to cooperate with the CFPB in connection with their most recent request for information,” Zillow officials said in a recent earnings report. “We continue to believe that our acts and practices are lawful and that our co-marketing program allows lenders and agents to comply with RESPA.”

Zillow officials assert that the company considers its co-marketing program to be compliant with RESPA and that it encourages consumers to shop around while looking for a mortgage and offers numerous ways for customers to comparison shop for lenders and agents on its site.

The CFPB is cracking down on RESPA enforcement. Earlier this year, the agency fined the lender Prospect Mortgage for not complying with RESPA and two real estate brokers and a mortgage servicer as well, who the CFPB claimed took kickbacks from Prospect Mortgage.

Source: “Zillow Advertising Under CFPB Fire Sets Real Estate Industry on Edge,” MarketWatch (May 18, 2017) and “CFPB Investigating Zillow for RESPA Compliance,” (May 11, 2017)