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A federal district court has dismissed a false advertising and antitrust lawsuit against Zillow over its for-sale-by owner listing feature, though the plaintiff has vowed to appeal.
In December 2020, New England FSBO site Picket Fence Preview sued Zillow, alleging violations of the Vermont Consumer Protection Act and the federal Lanham Act. The suit alleged that Zillow’s FSBO listing feature, which allows homeowners to list their homes on the popular site for free, deceptively funnel homebuyer inquiries to Zillow’s paid advertising customers, known as Premier Agents, rather than directly to homeowners.
“Zillow has engaged in illegal and unfair methods of competition as well as fraud and deceit by setting up a bait and switch scheme for Zillow’s ‘free’ listings for For-Sale-By-Owners and then making it difficult, or impossible, for prospective buyers to contact those seller’s directly,” the complaint said.
“Zillow’s pricing scheme is also predatory, in that Zillow claims it is offering a service for free, but in reality is charging the Premier Agents so they can advertise on the website of those free ads and receive hijacked inquiries from deceived buyers. This creates an unfair playing field for legitimate For-Sale-By-Owner publications.”
The language used is reminiscent of language Zillow rival CoStar used in accusing an unnamed competitor (which was obviously Zillow) of “hijacking listings” at Inman Connect Las Vegas last year. In that conference session, CoStar CEO Andy Florance appeared to be referring to Zillow Premier Agent advertising generally, not specifically ads on FSBO listings.
Picket Fence Preview’s complaint pointed to the “deceptive layouts” of the FSBO listings on Zillow, alleging that, in order to find the seller’s contact information a potential buyer has to go to “Get More Information” on the listing page and then Premier Agents “are listed first and the owner is listed at the bottom of the list.”
Currently, however, this does not appear to be the case. A review of several FSBO listings in different cities on Zillow’s website found that although a blue bar at the top labeled “Message” or “Contact Agent” links to a pop-up contact form for a Premier Agent, the property owner’s contact information appears directly below the listing description and often links to a pop-up contact form to reach the homeowner directly.
Screenshot of FSBO listing on Zillow on Aug. 31, 2022
The court first dismissed the suit in August 2021, but allowed the plaintiff to amend its complaint. Zillow asked the court to dismiss that amended complaint in October 2021 and the court obliged last week.
Judge Christina Reiss granted the motion, saying that a “non-consumer competitor” could not bring claims on the consumer’s behalf under the Vermont Consumer Protection Act and that Picket Fence Preview had not “plausibly plead the essential elements of a predatory pricing claim.”
“Defendant’s practices do not preclude consumers from advertising with multiple FSBO listing services simultaneously,” Reiss wrote in her order.
“They do not foreclose access to Plaintiffs services or to the marketplace, nor do they allegedly cause consumers to pay higher prices. Accordingly, while Plaintiff plausibly alleges competitive harm to itself, it does not plausibly allege present or future harm to consumers or competition through a FSBO seller’s use of Defendant’s website.”
She also did not buy Picket Fence Preview’s Lanham Act claim alleging false advertising, noting that the company “has not identified a statement made by Defendant that is ‘either literally or impliedly false.'”
“Defendant’s offer of a free FSBO listing focuses on a preliminary step in a real estate transaction, the advertising of a property for sale, with no guarantee as to what may happen thereafter,” Reiss wrote.
“A FSBO seller remains free to decide with whom and how it wants to sell any property it lists on Defendant’s website. Stated differently, a FSBO seller may refuse to deal with a real estate agent and refuse to pay a commission.”
Inman has reached out to Picket Fence Preview’s attorney, Thomas C. Nuovo, and will update this story if and when we hear back.
Picket Fence Preview has until Sept. 23 to appeal the decision, which the company told Real Trends it plans to do. Bill Supple, a co-owner of Picket Fence Preview, told Real Trends the company “hopes to work with a more understanding judge in their appeal.”
In an emailed statement, a Zillow spokesperson told Inman the company was pleased with the court’s decision.
“We strive to serve as a fair and open online marketplace by providing consumers with access to the most information available about residential real estate, which includes giving homeowners the option of using for sale by owner (FSBO) postings on our site for free,” the spokesperson said.
“Additionally, as part of our mission to empower all consumers, our site provides shoppers with tools that help them find their next home such as the option to connect directly with the seller of a FSBO or a real estate professional.”
