Lenders accused of creating fake Zillow profiles to get leads

by MPA02 Dec 2014

An employee at Zillow has filed a lawsuit, claiming some mortgage lenders misused the website’s co-marketing agent and lender program.


According to the lawsuit filed by Ashley Boehler, an inside sales consultant at Zillow, employees may have helped mortgage lenders create pseudo real estate agent profiles so they could, in turn, receive the information of potential homebuyers.


Boehler also claimed that mortgage lenders bent the rules of Zillow’s co-marketing program. The lawsuit stated some individual lenders were paying up to 90% of a real estate agent’s advertising costs on Zillow, which may have violated the Real Estate Settlement Procedures Act (RESPA), reported Inman News.


Zillow’s agent and lender co-marketing program allows lenders to share the marketing costs with the real estate agents. The agent specifies the dollar amount he/she would like each lender to contribute, up to 50% of the agent's total spend per lender. If an agent has more than one preferred lender, they cannot share more than 90% of the agent’s monthly advertising costs.


According to Jillayne Schlicke of The National Association of Mortgage Fiduciaries, nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.


She added that a marketing agreement will not comply with RESPA if it merely disguises the payment of referral fees to providers in a position to refer settlement service business.


Zillow’s use of the word “lender” is problematic, according to Schlicke. She said consumers see a loan originator’s ad, not a company ad, and loan originators can work for mortgage broker, bank or non-bank lender. Each is different and has its own set guidelines.

In a statement emailed to MPA, Zillow said the company does not comment
on specifics of pending litigation. "However, I can tell you Zillow takes any allegations about our work environment very seriously. Additionally, we have zero tolerance for inappropriate business practices of any kind. We closely monitor our Premier Agent and co-marketing programs, and we offer several ways for employees to alert management to suspicious activity. We investigate all complaints made in good faith, and work quickly to resolve any concerns."


Is TILA-RESPA a good or bad thing long term?