Zillow is fighting back against the consolidated Taylor-Armstrong suit that accuses the home search giant of running a fraudulent scheme to steer homebuyers toward its own mortgage product.
The listing giant filed a motion to dismiss the consolidated case on Feb. 20 in the U.S. District Court for the Western District of Washington in Seattle.
The case, now known as Taylor v. Zillow and assigned to U.S. District Judge James L. Robart, has grown steadily since it was first filed last September by plaintiff Alucard Taylor, who alleged Zillow’s referral program tricked consumers into working with Zillow-affiliated agents and drove up home prices in the process.
The lawsuit was amended in November to include charges that Zillow compelled agents to steer buyers toward Zillow Home Loans, an alleged violation of the Real Estate Settlement Procedures Act (RESPA). In December, Judge Robart granted a request to merge the Taylor suit with a second class action, Armstrong v. Zillow, concluding that the matters involved substantially similar allegations and overlapping proposed classes.
In its motion to dismiss, Zillow insisted it “has leveled the playing field for residential real estate,” providing consumers with “more choice and information, regardless of which agent or lender they decide to use.”
The company’s attorneys characterized the 100-page complaint as “heavy on filler but thin on substance,” arguing that the plaintiffs “do not plausibly allege any wrongdoing by Zillow, how plaintiffs lost money, and why it is Zillow’s fault.”
When a homebuyer clicks “Contact Agent” on Zillow’s website, they may believe they are reaching out to the person who listed the home. And when their agent later suggests getting pre-approved through Zillow Home Loans, they may not realize that suggestion comes with financial incentives attached. Those two instances, a button click and a loan recommendation, are the foundation of the case against Zillow, which the listing giant argues does not amount to fraud.
On the agent referral side, Zillow argues plaintiffs’ own complaint defeats their theory; the complaint acknowledges that buyer-side commissions are pre-set by the seller’s listing agreement before any buyer’s agent is involved, and that those commissions are ultimately paid by sellers, not buyers.
On the mortgage steering side, only one of the 11 named plaintiffs actually obtained both a ZHL pre-approval letter and a ZHL loan. Several others received pre-approval letters but chose different lenders, which Zillow argues proves its tools carry no obligation.
Zillow also contests the RESPA claims on technical grounds, arguing that free, non-binding pre-approval letters don’t qualify as “settlement services” under the statute, and that its commission-sharing arrangement with Flex agents is explicitly protected under RESPA’s cooperative broker exemption.
This is the fourth complaint filed against Zillow related to its Flex program. Plaintiffs, represented by Hagens Berman Sobol Shapiro, will have the opportunity to respond before Judge Robart rules. A hearing is scheduled for March 20, 2026.
