Government Affairs

U.S. CFPB Concludes RESPA Investigation of Zillow Co-Marketing

The U.S. Consumer Financial Protection Bureau (CFPB) has concluded its investigation of Zillow for possible Real Estate Settlement Procedures Act (RESPA) violations and will not take enforcement action against the online real estate database company.

The Zillow Group made the announcement about the resolution on 25 June 2018 in a Form 8-K filing with the Securities and Exchange Commission (SEC). On 22 June 2018, the CFPB sent a letter to Zillow notifying the company of its decision.

In February 2017, the CFPB Office of Enforcement had notified Zillow through a Notice and Opportunity to Respond and Advise (NORA) letter that the Office was considering whether to recommend the Bureau take legal action against the company. The Office alleged that Zillow had possibly violated Section 8 of RESPA and Section 1036 of the Consumer Financial Protection Act (CFPA).

The Bureau looked into whether the co-marketing practice of Zillow allowing lenders to pay for portions of the advertising costs of certain real estate agents in exchange for having their information on the same webpage violated sections of RESPA and the CFPA. The CFPB initially raised whether this arrangement amounted to compensation for the referral of business and thus a violation of RESPA. In the end, the Bureau determined to not seek any additional information from Zillow and to conclude its inquiry with no legal action.

Related: New York Judge Revives U.S. CFPB Constitutionality Question

How This Impacts Mobility

A decision by the CFPB to move forward with an enforcement action would have had immediate implications, pending an appeal by Zillow, for members of Worldwide ERC® involved with the marketing of real estate services. However, the precedent set by the inaction has a much larger implication on the mobility community as to other situations involving a transferee, and marketing service situations now not automatically being viewed as a potential violation of RESPA.

The investigation began under then-Director Richard Cordray, who was appointed by President Obama, who took a forceful stand on enforcement actions. As witnessed with the Zillow decision and recent others by the Bureau, the CFPB has taken a more business-friendly position toward decisions about enforcement actions. Should CFPB Director Nominee Kathy Kraninger be confirmed by the Senate, she would likely continue the policy direction instituted by current CFPB Acting Director Mick Mulvaney.

Related: Mulvaney Continues to Shape U.S. CFPB

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