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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
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