Trulia, a subsidiary of the Zillow Group, was hit with a lawsuit on November 28 from the Eastern District of New York that stated the company’s Premier Agent advertising program is “unfair,’ “deceptive,” and “a diversion of buyers away from listing agents.”

Specifically, this lawsuit states that Trulia, and for that matter the Zillow Group, connects prospective buyers with real estate agents “…who have no actual connection to the property being advertised, other than having paid the defendant (Trulia) to be presented prominently alongside the property.”

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The lawsuit compares Premier Agent “…to a broker who purchases a billboard to advertise a listing already held by a competitor.” Just so you know, Trulia nor the Zillow Group requires Premier Agent members to get consent from the listing agent or firm to advertise next to a listing.

The lawsuit contends that because of this lack of consent, it is less likely that the prospective buyer looking at the advertised listing with actually and/or successfully connect with the proper listing agent.

This federal class action lawsuit is seeking $5M in damages on the behalf of plaintiffs Andrew Kim, a licensed agent in Queens, and John Doe, a broker who oversees the work of six licensed agents, and “all others similarly situated.”

Since the creation of Zillow in its initial iteration as an advertising company, its Premier Agent has generated the lion’s share of its revenue. In Q3 2019, Zillow’s Premier Agent program earned $240.7M, an increase of +3% y/y. Also during Q3 2019, for the first time ever, Zillow’s iBuying “Home” segment of the business, Zillow Offers, surpassed the revenue gleaned from this agent-advertising program.

According to Rich Barton, co-founder and current Zillow Group CEO, “It’s the size and strength of Premier Agent that allows us to invest in and expand Zillow Offers so quickly.”

Thanks to the RealDeal’s EB Solomont for source data.

Also read: Podcast: The 3 Biggest Things That Will SHOCK the Real Estate Industry (Are YOU Ready?), Podcast: Why You Lack Leads, Listings, Money & Motivation (+what to do about it!), Harris Rules’ “Daily Success Game”