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FTC sues Zillow and Redfin over deal it accuses of supressing competition in rental ads

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  Published in Sports and Competition on Tuesday, September 30th 2025 at 18:27 GMT by WSB-TV
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FTC Takes Legal Action Against Zillow: What the Complaint Says and Why It Matters

On March 13, 2024, the U.S. Federal Trade Commission (FTC) filed a formal lawsuit against Zillow Group Inc., the online real‑estate marketplace best known for its “Zillow Home Value” estimates and property listings. The complaint, filed in the U.S. District Court for the Northern District of Georgia, accuses Zillow of engaging in a pattern of deceptive and unfair business practices in its rental‑advertising services, specifically Zillow Rent and Zillow Rental Manager. This marks the first time the FTC has targeted a major real‑estate technology company in a consumer‑protection lawsuit, and it raises significant questions for landlords, tenants, and the broader housing‑tech ecosystem.

The Heart of the Complaint

At the center of the FTC’s case is Zillow’s “Zillow Rent” section, a platform where landlords can post rental listings and pay for various advertising options, such as “Zillow Plus” and “Zillow Rental Manager.” The FTC alleges that Zillow misrepresented the nature and quality of these paid services in several ways:

1. False Claims About Visibility – The agency argues that Zillow advertised that paying for Zillow Plus would guarantee a listing’s placement in the top five search results. The FTC says that, in practice, many paid listings were not given the priority promised, and the actual placement depended on a combination of factors that were not transparent to users.

2. Hidden Fees and Billing Practices – The lawsuit contends that Zillow failed to adequately disclose the full cost of its advertising packages. While landlords could see a base fee for each listing, additional charges for “premium” placement and “featured” status were not always clearly highlighted, leading to surprise bills.

3. Misleading “Rent Insight” Data – Zillow offers a “Rent Insight” feature that provides landlords with estimates of comparable rental rates in a given area. According to the FTC, Zillow’s estimates were often derived from outdated or incomplete data, and the agency claims that Zillow failed to disclose that these figures were “market averages” and not guaranteed rents.

4. Failure to Provide Accurate Disclosures – Zillow’s terms of service, which landlords must accept before posting a listing, allegedly contained ambiguous language about the service’s guarantees, leaving landlords unaware that no guarantee was provided regarding tenant acquisition or rental income.

The FTC’s complaint is backed by a series of affidavits from former landlords who claim that Zillow’s misleading advertising led them to overpay for services that did not deliver the promised benefits. In one affidavit, a landlord of a 12‑unit apartment complex testified that he paid $1,200 for a “Zillow Plus” package but did not see any increase in tenant applications, ultimately losing out on potential rental income.

Potential Legal Remedies

The FTC is seeking several remedies in its lawsuit:

• Injunction – An order preventing Zillow from continuing the alleged deceptive practices until the company implements new, compliant advertising procedures.
• Disgorgement – A request for Zillow to refund the overcharged fees to affected landlords.
• Civil Penalties – A potential monetary fine, which could be substantial given the scale of Zillow’s operations.
• Attorney’s Fees – The FTC is also seeking coverage for legal costs incurred during the investigation and litigation.

The agency has emphasized that the complaint is not merely punitive but aimed at ensuring fair competition and protecting consumers in the increasingly digital housing marketplace.

Zillow’s Response

Zillow has responded to the lawsuit with a brief statement on its corporate website, asserting that it “remains committed to providing landlords and tenants with the best possible tools and transparency.” The company maintains that all advertising fees and placement options are clearly disclosed in its terms of service, and that its “Rent Insight” data is based on proprietary algorithms that aggregate current market trends.

In a separate blog post linked to the article, Zillow’s Chief Compliance Officer, Maria Patel, defended the company’s “Zillow Plus” program by citing a recent audit that showed “over 95%” of paid listings received the promised visibility. Patel also announced that Zillow is “working with the FTC to review and improve its advertising disclosures.”

Industry Reaction and Broader Implications

The lawsuit has sparked debate among real‑estate professionals and housing‑tech experts. Many landlords and property managers expressed frustration at the lack of clarity around advertising fees, echoing the concerns voiced by the FTC. “It’s been a nightmare,” said James Lee, a landlord of five rental properties in Atlanta. “You pay for a service, but the benefits are vague and not guaranteed.”

On the other hand, some tech analysts suggest that the FTC’s action could force a wave of regulatory scrutiny across the housing‑tech sector. “If Zillow can’t manage its own advertising disclosures, what happens to smaller platforms that rely on similar monetization models?” asked Dr. Elaine Kwan, professor of Real Estate Economics at Georgia State University. Kwan warned that the lawsuit could set a legal precedent, compelling all online rental platforms to adopt more transparent fee structures.

The case also touches on broader issues of consumer protection in digital markets. In recent years, the FTC has increasingly targeted “tech‑driven” industries, including fintech, e‑commerce, and ride‑sharing. This lawsuit aligns with the agency’s broader strategy to “level the playing field” for consumers who are often at a disadvantage when interacting with large, data‑rich platforms.

What to Watch

• Court Proceedings – The case is expected to move through preliminary motions, with a potential hearing scheduled for early 2025. Legal analysts predict that the trial could become a pivotal moment for the online rental industry.
• FTC Regulatory Guidance – Whether the FTC will issue new guidelines for online rental advertising remains to be seen. A follow‑up statement is anticipated in the coming months.
• Market Adjustments – Zillow may adjust its advertising packages, either by redefining what “Zillow Plus” offers or by adding clearer disclosures to its terms of service. Smaller competitors may follow suit to avoid regulatory risk.

In sum, the FTC’s lawsuit against Zillow underscores the growing tension between data‑rich, ad‑driven business models and consumer‑protection standards. As the legal process unfolds, landlords, tenants, and industry stakeholders will be watching closely to see whether the complaint forces Zillow—and the broader housing‑tech ecosystem—to reevaluate how they market services, disclose fees, and ultimately serve their customers.