Zillow agrees to $15M settlement following federal probe into securities violations

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Zillow settlement overview: 

• Who: Zillow has settled a class action lawsuit with investors.
• Why: The settlement ends claims that Zillow downplayed a federal agency’s investigation into its practices, causing some investors to buy at an inflated price.
• Where: The Zillow settlement is in a Washington federal court.
• What are my options: Consumers looking for alternatives to Zillow may be interested in Offerpad. 

Zillow has agreed to pay $15 million to settle a lawsuit alleging it withheld information about a federal investigation into a co-marketing program for lenders and real estate agents, causing investors to purchase Zillow stock at artificially inflated prices.

Class representatives Jo Ann Offutt, Raymond Harris, and Johanna Choy filed a motion for preliminary approval of the class action settlement with Zillow Group Inc. on March 31 in a Washington federal court. 

According to the plaintiffs, Zillow violated the U.S. Securities and Exchange Act by making misleading statements about the U.S. Consumer Financial Protection Bureau’s investigation. 

“Plaintiffs allege that Defendants’ misrepresentations about Zillow’s legal compliance caused them to purchase the company’s stock at artificially inflated prices,” the motion states.

“Defendants have denied, and continue to deny, any and all allegations of fault, liability, wrongdoing, or damages.” 

Zillow downplayed the investigation, investors claimed

Zillow downplayed the investigation when it first acknowledged it in 2017, two years after it began, the investors’ complaint alleged. 

Three months later, the company said the U.S. Consumer Financial Protection Bureau was considering taking legal action, causing its stock price to fall 15.5% over a two-day period, the investors said.

“Plaintiffs allege that defendants’ misrepresentations about Zillow’s legal compliance caused them to purchase the company’s stock at artificially inflated prices,” the motion states.

The agency decided in 2018 not to take enforcement action after considering whether the co-marketing program violated the federal Real Estate Settlement Procedures Act. It sought to investigate whether lenders made illegal payments to real estate agents for referrals.

Zillow maintains that the program is legal. 

Meanwhile, Zillow Group Inc., Lowe’s Companies Inc. and Expedia Group Inc. allegedly use spyware to track how users interact with their websites in violation of Pennsylvania law, according to three 2022 class action lawsuits.

What do you think of the allegations against Zillow? Let us know in the comments! 

The investors are represented by Colin M. George of Praesidio Consumer Law PLLC and Laurence Rosen and Jonathan Stern of the Rosen Law Firm PA.

The Zillow class action lawsuit is In Re Zillow Group Inc. Securities Litigation, Case No. 2:17-cv-01387, in the U.S. District Court for the Western District of Washington.

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