The National Association of Realtors (NAR) is facing yet another lawsuit. The latest complaint, which is seeking class-action status, was filed on Friday by eight real estate agents in Los Angeles County Superior Court.
The suit claims that NAR, along with Move Inc., Move Sales, OpCity Acquisitions, OpCity Inc. and REA Group Ltd. — which, according to the complaints, are all wholly owned subsidiaries of Move and News Corp, who is also a defendant — defrauded agents by selling them fake leads. Move is the parent company of home search portal Realtor.com.
The eight named plaintiffs are Nevada agents James Bandy and Juan Carlos Carrera; Florida agents Kamesha Sylvester Hamilton and Cliff Woodall; Bryan Casto, an agent in California; Michael Echternkamp, an agent in Washington state; Maria Hardy, an agent in New York; and Nidia Sanchez, an agent in Georgia.
While NAR is a trade group and does not sell consumer leads to agents, the plaintiffs claim that NAR “knowingly conspired with, aided and abetted and participated in the conduct alleged.” Additionally, they claim that NAR had full knowledge of the activities conducted by its co-defendants.
According to the complaint, the defendants have a history of operating their businesses in a “fraudulent, deceptive and unlawful manner and have received hundreds if not thousands of complaints and threatened lawsuits” from plaintiffs in similar situations for identical conduct.
The complaint also alleges that the defendants have “consistently failed and refused to properly train, screen, conduct background checks, supervise, reprimand, direct and instruct” their senior management in “a manner at or above the standard of care in accordance” with their policies and the laws of their respective home states.
In the filing, the plaintiffs allege that the defendants did not disclose that they utilized other owned websites and media properties to obtain the data sold to agents as potential leads. The complaint takes no issue with how the data was obtained, claiming that the defendants obtained the data in lawful manner in compliance with privacy laws.
But according to the complaint, by combining data from the sites the plaintiffs knew about with ones they didn’t, they were being sold leads that included many consumers who had no interest in buying a house.
“These processes (the ‘Unlawful Bundling’) are designed to amass a tremendous (and tremendously growing) database which the defendants then characterize as ‘leads,’” the complaint states.
The plaintiffs allege that the other data involved in the “unlawful bundling” is generated by anyone who interacts online with keywords such as “home, property, real estate, house, mortgage, and rent.”
At all times relevant to the complaint, the defendants “were (and remain) keenly aware that at approximately half of these so-called ‘leads’ that defendants bundled and sold to plaintiffs were not ‘leads’ at all; but a series of individuals for who defendants have collected personally identifying information, but who have no interest in purchasing real estate,” the suit alleges.
The plaintiffs claim the defendants then took things a step further by creating a “fake leads scheme” in which they distributed misleading information and utilized the defendants’ association with NAR to “fraudulently induce trust and reliance in” the misleading information.
The complaint claims that the defendants did this by employing a sales team that was trained and provided with “various scripts designed to disseminate the misleading information along with other false and fraudulent information in an effort to defraud, deceive and mischaracterize the value and potential effectiveness of defendants’ lead generation business.”
They also claim that the defendants required the plaintiffs to sign up for various lead generation products but then changed contract terms and conditions without notifying the plaintiffs.
Although the complaint acknowledges that NAR itself is not selling leads, the plaintiffs claim that NAR is complicit because it authorized its co-defendants to “utilize NAR’s name, logo, intellectual property, database and goodwill to market, promote and legitimize the products and services of its co-defendants.” It also alleges that NAR relied upon the co-defendants to build its membership ranks through this licensing agreement.
The plaintiffs allege that the defendants’ scheme was “so widespread that it has caused harm to the goodwill of each prospective class member and the residential real estate agency (and brokerage) business as a whole.”
The suit is seeking class-action status for a group that includes all real estate agents in the U.S. who purchased leads, including the so-called fake leads, from the defendants between Aug. 23, 2020, and the present. The plaintiffs are asking for damages and attorneys’ fees.
In an emailed statement, a spokesperson for Realtor.com said the company does not comment on pending litigation, and NAR clarified that it does not own or operate Move.
“We will address these false allegations in court,” the spokesperson wrote in an email.
