A new class-action lawsuit filed on November 7, 2025, accuses Zillow of violating federal and state laws by linking access to its Premier Agent and Flex leads to referrals for Zillow Home Loans.
The suit, Armstrong v. Zillow Group, claims the company used its dominance in real estate lead generation to pressure agents into steering buyers toward its own mortgage products, creating conflicts of interest and inflating consumer costs.
Here’s what we know so far.
The Allegations
The 34-page complaint, filed by Tousley Brain Stephens PLLC and DiCello Levitt LLP, alleges that Zillow’s practices violate the Real Estate Settlement Procedures Act (RESPA), the Washington Consumer Protection Act, and laws prohibiting aiding and abetting fiduciary breaches by agents.
At the center of the case is Zillow’s “quid pro quo” structure:
- Agents who met quotas for sending clients to Zillow Home Loans (ZHL) received more or better-quality leads.
- Those who didn’t risked losing access to Zillow’s lucrative Flex program, a key referral source for top-producing teams.
- Consumers, meanwhile, were allegedly unaware that their agent’s access to leads and income depended on whether they used ZHL for pre-approval or financing.
The complaint states:
“Zillow’s system harms consumers, who are robbed of the disinterested advice of their fiduciary real estate agent, and instead are unknowingly steered towards ZHL’s limited and often uncompetitive mortgage products.”
Zillow’s Business Model and “Super App” Strategy
The filing positions Zillow’s alleged conduct within a larger strategy to create a “housing super app” that captures every stage of the homebuying process on a single platform, from finding an agent to securing a loan.
Internal investor materials cited in the complaint show that Zillow views mortgage adoption as a key growth lever, with plans to increase the share of buyers connected to its “enhanced market partner” agents from 27% to 35% by the end of 2025, and eventually to 75%.
According to the complaint,
“Zillow began explicitly leveraging its greatest asset, lead generation, through its Flex program, pairing Premier Agent partners with ZHL loan officers and incorporating ZHL-related metrics into agents’ performance framework.”
This model, the suit argues, gives Zillow enormous control over the flow of buyer leads nationwide.
The company, which holds roughly two-thirds of all U.S. online home-listing traffic, can influence not just which agents receive clients, but how those clients finance their purchases.
How the Alleged Kickback System Works
The lawsuit outlines how Zillow allegedly tied agent success to ZHL referrals:
- Agents were assigned ZHL pre-approval targets based on lead volume.
- Zillow monitored compliance through recorded calls, scripts, and leaderboards ranking teams by ZHL adoption rates.
- Agents who met these quotas gained higher placement and more leads, while noncompliant teams faced Zillow’s “disengagement process,” which cut off lead flow.
One passage calls the system “a textbook quid pro quo that turns Zillow’s referral network into a mortgage funnel.”
Another adds:
“Instead, and without their knowledge, buyers are being steered towards ZHL mortgages, not because they are a better product, but because the agents are required to do so by Zillow in order to get the leads needed for their business.”
Consumer and Agent Impact
The complaint claims the alleged steering harmed both consumers and agents.
Buyers were deprived of impartial advice and pushed toward ZHL’s narrower range of mortgage products, which lacked transparency and competitiveness.
According to the filing, borrowers funneled through Zillow’s system “paid higher interest rates and fees than comparable borrowers who financed their homes through independent lenders.”
The lawsuit also alleges that Zillow misrepresented its Premier Agent and Flex participants as independent professionals, even though their continued access to leads depended on ZHL referrals.
As the complaint notes:
“Consumers were not told that their agent’s continued access to Zillow leads, and therefore their livelihood, depended on steering clients to Zillow’s own lender.”
Beyond consumer impact, the filing argues Zillow’s system placed agents in legally and ethically compromising positions by incentivizing them to act against their fiduciary obligations of loyalty and full disclosure.
Legal Remedies and Broader Context
Plaintiffs are seeking class certification for all U.S. consumers referred to ZHL by participating agents, along with treble damages under RESPA and the Washington statute.
The complaint also seeks injunctive relief to halt the alleged practices and restitution for unlawfully obtained gains.
The case follows Zillow’s 2023 class-action settlement over its mortgage co-marketing program, which also involved RESPA allegations.
It also parallels a separate 2025 class action from Hagens Berman and Cohen Milstein, which accuses Zillow of inflating homebuying costs through its Flex model by charging partner agents up to 40% of their commissions.
If successful, Armstrong v. Zillow could have sweeping implications for lead-sharing programs across the industry.
The complaint concludes:
“Zillow’s conduct, as alleged, falls squarely within the practices RESPA was designed to prohibit, kickbacks that distort competition, deceive consumers, and undermine trust in real estate representation.”
For readers, this case is worth watching. If the court agrees that lead access qualifies as a “thing of value” under RESPA, it could reshape how referral platforms and affiliated lenders operate.
In the meantime, you can review the full complaint below to see the specific claims and evidence presented in Armstrong v. Zillow.
