Thumbtack Price Fixing and Antitrust

Thumbtack has recently started a program that fixes prices for independent contractors outside their firm, called Fixed Price Projects.

A copy of author’s official request that asks the United States Federal Trade Commission, and the United States Department of Justice to investigate Thumbtack operating in an open collusion with thousands of independent home services professionals on the grounds of an alleged violation of the Federal Trade Commission Act of 1914 an alleged violation of the Sherman Antitrust Act of 1890 as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with alleged collusion, false advertising, wire fraud, and price-fixing practices (15 U.S.C. § 1; 15 U.S.C. § 45; 18 U.S.C. § 1343)

Attn: Citizen Complaint Center, Antitrust Division
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530

Attn: Office of Policy and Coordination, Room CC-5422
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. N.W.
Washington, DC 20580

Please see information about a possible antitrust violation as described below.

What are the names of companies, individuals, or organizations that are involved?

Thumbtack, Inc.
1355 Market Street, Suite 600
San Francisco, CA 94103
support@thumbtack.com
(866) 501–5809

and

Marco Zappacosta
Co-founder & CEO Thumbtack, Inc.
San Francisco, CA

How do you believe they have violated the federal antitrust laws?

According to Thumbtack website, “When you book a job, you’re booking with an independent service professional. Thumbtack does not provide the booked service and is not responsible for the service (except for coverage based on the terms of the Thumbtack Guarantee). Thumbtack is simply facilitating your direct contractual relationship with the independent service professional you are matched with.”

Generally, Thumbtack allows pros to set prices independently, where company claims: “Your pricing is unique, just like the experience you give customers. And how much you charge for your service is up to you. Not all pros price the same, but it’s worth adding prices.”

However, Thumbtack has recently started a program that fixes prices for independent contractors outside their firm called Fixed Price Projects.

“Get matched with a vetted, top-rated pro and pay a fixed price” and “Fixed prices. There’s no need to negotiate prices. You’ll pay a fixed, local price right in the app.” and “Thumbtack’s on-demand bookings conveniently match homeowners with vetted, independent pros in seconds and feature upfront competitive, fixed pricing in a continually expanding list of categories. Think house cleaning, gutter cleaning, junk removal, TV mounting, pest control services, carpet cleaning, window cleaning, roof inspections, pool cleaning, home inspection, and pressure washing.”

Similar price-fixing schemes are currently devised by Amazon Home Services and Handy (HomeAdvisor) that I have previously reported to the DOJ in a separate report.

Amazon Home Services, for example, requires service providers to offer a price set by Amazon even if the consumer contacts the service provider directly. “Pros are required to offer the same price on Amazon as they do if you called them directly,” according to the company’s web site. Such price parity agreement is an active anti-competitive mechanism that provides an online network working as a monopoly to place an exaggerate rake on services of others without the consequence of higher costs to consumers.

Price fixing is a white-collar federal crime in the United States. There is no justification for price fixing — it is always illegal even if the prices set were reasonable to customers. The US Department of Justice and Federal Trade Commission must take action against “Fixed Price Projects” scheme promoted by Thumbtack because platform’s Terms prevent consumers from participating in class action litigation, set limits of Statute of Limitations to one year, and force all users into arbitration. If the government does not prosecute Thumbtack, it is unlikely that consumers will. United States courts have systematically upheld arbitration clauses that force consumers into arbitration on similar cases, such as Meyer v. Uber Techs., Inc., 868 F.3d 66 (2d Cir. 2017)

What is the product or service affected by this conduct? Where is the product manufactured or sold, or where is the service provided?

An online marketplace is an arena for competitive dealings. Because legitimate online marketplaces aggregate services and products from a wide array of providers, wider availability and impartial offerings can be offered to consumers as a means to deliver genuine value. All well-managed Internet marketplaces are invaluable elements of a healthy economy. People tend to like excellent online marketplaces because we make products and services much more accessible with an impartial manner. On the other hand, the raked marketplace that engages in price-fixing actively abuse this process by establishing an arena for monopolistic behavior. As a lawful online alternative to competitive dealings in the housing industry, Open Marketplace and market participants are directly harmed by actions of Thumbtack. The primary reason for price-fixing services of independent contractors by Thumbtack is to hide excessive take rake from consumers. This tendency prevents alternative rake-less or lower-raked marketplaces from offering consumers lower prices in competitive setting. If a new marketplace starts to offer consumers lower take rake service, Thumbtack will simply adjust price fixed amount by shifting the cost of operations outside of their firm onto third-party pros, temporarily, or otherwise. In effect, lower prices due to open competition are impossible to offer in such environment. The only way to compete with Thumbtack under such terms is to establish an alternative unlawful price fixing scheme.

What is your role in the situation in question?

I currently operate HomeOpenly.com service. HomeOpenly is an Open Real Estate Marketplace™ designed and built to improve the homeownership experience in the United States. HomeOpenly is a technology company that seeks to implement an Open Marketplace experience for homeowners and service providers as primary means for booking home maintenance, home repair, and similar services locally. HomeOpenly operates subject to a 0% rake as our primary competitive advantage to establish a significantly lower fee schedule than the price-fixed fee schedule for similar services provided by Thumbtack. Our efforts are actively hampered by anti-competitive practices of Thumbtack. With my request to the Department of Justice and the Federal Trade Commission, I am seeking a fair and open competitive environment to develop our service. Successful implementation of an Open Marketplace™ platform requires full enforcement of existing antitrust laws that are enacted to protect US consumers. As long as raked marketplaces are able to price-fix services of independent service providers in exchange for excessive fees, an Open Marketplace™ operates at a competitive disadvantage and suffers damages as a result.

Who is harmed by the alleged violations? How are they harmed?

While prices can be successfully fixed by governments or private monopolies for an overall appearance of savings, such archaic methodology is unable to deliver value, decisively. Economic value is a subjective term, determined freely as an equilibrium between the purchasing power of a buyer and the holding power (desire to sell) of competing service providers.

Price fixing and price parity agreements implemented by the raked marketplaces aim to redefine this pricing equilibrium at the overall cost to impartial free market experience and an aggregate loss of overall value. By utilizing price-fixing and price parity clauses, Thumbtack operates as a raked marketplace that aims to maximize rake revenue, instead of adding value to the overall transaction.

A price-fixing practice is defined by the FTC as an agreement among competitors that raises, lowers, or stabilizes prices or competitive terms. To preserve free market forces in the modern age of online marketplaces, this definition must actively include a new breed of price-fixing agreements made by third parties on behalf of competitors that raises, lowers, or stabilizes prices or competitive terms. This mechanism is also known as “hub-and-spoke” conspiracy. A hub and spoke conspiracy is correctly characterized as an agreement to eliminate competition among the spokes. None of the pros involved with Thumbtack “Fixed Price” scheme compete with one another on pricing.

As long as third parties are allowed to openly set prices for services of others, massively-funded schemes such as Amazon Marketplace, Amazon Home Services, Uber, Lyft, GoPuff, Doordash, Opendoor Brokerage, Redfin Partner Program, etc. will utilize price-fixing and price parity mechanisms to successfully offset inefficiencies that come as a result of setting commission rakes for independent contractors, or small third-party competitors. These schemes set prices outside of their firm in order to offset hard costs of operations and to keep competitors from offering better terms. The only way to compete in “Uberized” economy is to offer an alternative “Uberized” marketplace, where prices are set the by hub against the spokes, and, ultimately, against consumers’ best interests.

Your response to this request carries a decisive outcome of how the next generation of online marketplaces are designed and built to help service the massive economy of the United States.

Today, the question before the FTC and the DOJ is simple: is the United States a price-fixed or a free market economy?

If you continue to observe the former, raked marketplaces such as Thumbtack will happily deliver price-fixed services of independent contractors directly to consumers.

If you are confident in the latter, immediate action is required to re-establish free market forces and to stop price-fixing and price parity practices by raked marketplaces across the United States.

If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice.

NFHA v. Redfin: Partner Program Price Thresholds

Redfin Partner Program is a broker-to-broker collusion scheme

Today, the National Fair Housing Alliance (NFHA) announced a settlement agreement to resolve a fair housing lawsuit that will “expand housing opportunities for consumers in communities of color in major cities throughout the United States.”

Lisa Rice, president and CEO of NFHA, failed to understand that Redfin Partner Program is something consumers should not have access to at all. The fact that Redfin have had price thresholds against it actually helped consumers avoid being scammed into paying inflated broker commissions.

I, therefore, had filed an objection with the Western District of Washington United States District Court asking the judge to reject the proposed Settlement Agreement with regards to the case 2:20-cv-01586-JLR-TLF (NFHA v. Redfin) Obviously, my objection is solely focused on the broker-to-broker collusion scam known as Redfin Partner Program, and not the services provided by Redfin Agents.

Redfin currently mandates a 30% blanket referral fee from agents that participate in this program. This open arrangement between competitors leads to an inefficiency known as “reverse competition” where referring brokers end up competing not for the consumer attention but for the attention of the middle-man who steers the consumer toward its network of brokers and away from competitors. Such pay-to-play steering results in lower quality of service and/or higher commissions, fees, and price levels. In effect, Redfin turns consumers into a commodity for sale to a competing brokerage. According to Redfin, “Redfin Partner Agent keeps 70% of the commission when a referral closes a transaction.” This means that consumers are systematically overpay for commissions in this scheme — they hire two brokers for the work of one. In effect, the colluding Partner Agent works for their client 70% of the time and 30% is converted into a junk fee.

To comply in good faith with 12 U.S.C. 2607 (RESPA Section 8) and 12 CFR Part 1024.14(g)(1)(v) (Regulation X) exemption for cooperative brokerage and referral arrangements, real estate agents must render referral agreements on an individual basis, in a particular instance for a particular transaction.

The amount of a commission, a rebate, or a referral fee is always negotiable and must be negotiated with respect to an individual transaction. It is a per se violation of the Section 1 of Sherman Act for real estate brokers to agree on a “standard” referral fee that will be paid for producing a client. Real estate brokers may discuss or negotiate the referral fees compensation only with respect to an individual transaction. Real estate professionals are not allowed to enter into “standard” referral agreements because such agreements always restrict free trade.

Since 2004, Redfin Partner Program was the first online broker collusion scheme that scaled into tens of millions of US homes. People intuitively think that Redfin saves money, and it doesn’t — it costs money. Over 40% of all transactions originated by Redfin are farmed out to random competing brokers. Redfin only operates as a brokerage in select areas, everywhere else it uses “partner agents” with various brokerages such as Berkshire Hathaway HomeServices, eXp Realty, Windermere Real Estate, Keller Williams Realty, Inc., RE/MAX, Coldwell Banker, NextHome, Inc., HomeSmart, Compass, John L. Scott Real Estate, CENTURY 21, Realty ONE Group, Vylla, ERA Real Estate, Weichert Realtors, Better Homes and Gardens Real Estate, Fathom Realty, Intero Real Estate Services, John R. Wood Properties, Worth Clark Realty, Sotheby’s International Realty, etc.

“Yes. It’s not something we broken out into a lot of detail, but generally you should think of revenue from partner transactions as having very high gross margin because the cost to serve the customer mostly comes from the agent who does that, not someone from within Redfin. So again, we haven’t broken it out, but you can’t certainly use that assumption that as very high gross margin on the partner business and disentangle it using that.”

This is an excerpt from a statement by Chris Nielsen, Chief Financial Officer at Redfin, who openly admits in Q2 2021 earnings call that collusion with competitors is a “high gross margin” revenue source for the brokerage because the cost of a tangible service “to serve the customer” does not exist for the “hub” that administers the scheme.

The BIG underlying problem here is that Realtors would much rather collude with “no upfront costs” with these schemes and give up 30% of their future commissions into a referral fee network than to offer these same amounts as savings to their clients. The reason for this is that each transaction is handed to a Realtor at no upfront cost and often brings in tens of thousands to a broker. A Realtor would rather lose 30% of this large fee for a 100% certainty of receiving 70% of the gross commission, instead of offering 30% as savings to their client. The only way to prevent this is to stop brokers from being able to pool together to form referral networks, meaning, to enforce the Sherman Act.

Redfin Partner Program is a broker-to-broker collusion scheme, where “partner agents” unlawfully agree to pay massive kickbacks to receive your information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, 12 C.F.R. § 1024.14.

As a consumer, you will always significantly overpay for Realtor commissions subject to hidden kickbacks and pay-to-play steering promoted in this scheme.
 
United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies.

Zillow Flex kickbacks and wire fraud

Zillow Flex is a “shell” real estate broker in collusion with “partner agents” who pay massive kickbacks to receive consumers’ information

Zillow Flex has just published their kickbacks pricing schedule for anyone to see. It will take the hammer on the head, but, eventually, Rich Barton is now committing multiple counts of wire fraud by blatantly scaling Regulation X, RESPA Section 8, and Sherman Antitrust Act violations online.
 
“For each purchase or sale of a property you complete with a Premier Agent Flex connection, you will pay Zillow a percentage of the full commission you expect to receive for your side of the transaction. The referral for each transaction is determined by (1) the location of the property and (2) the purchase or sale price of the property. The referral fee may vary by each Premier Agent Flex market. The referral fee for each Premier Agent Flex market is in the rate card below. If a property for a transaction is located outside of the Premier Agent Flex markets below, then the referral fee will be 35%.” Source: Zillow Flex Pricing
 
Zillow Flex is a broker-to-broker collusion scheme, where “partner agents” unlawfully agree to pay massive kickbacks to receive consumers’ information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, 12 C.F.R. § 1024.14

Consumers will always significantly overpay for Realtor commissions subject to hidden kickbacks and pay-to-play steering promoted in this scheme.
 
12 C.F.R. § 1024.14(b) (Regulation X) states: “No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in § 1024.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.”
 
Zillow Flex (and subsequently Zillow 360) is a shell entity that does not act in a brokerage capacity. A mere possession of a real estate license is not sufficient to receive kickbacks under 12 C.F.R. § 1024.14(g)(1) exemption. This exemption is only valid “when all parties are acting in a real estate brokerage capacity” and does not authorize compensation to shell entities or sham arrangements that are not a bona fide “provider of settlement services.”

To comply in good faith with 12 C.F.R. § 1024.14(g)(1) (Regulation X) exemption and 12 U.S.C. § 2607(c)(3) (RESPA Section 8) exception for cooperative brokerage and referral arrangements, genuine real estate agents and real estate brokers must render referral agreements in a particular instance for a particular transaction.

United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies. The Supreme Court has further ruled that all violations of the Sherman Act also violate the FTC Act.

In fact, Zillow Flex, licensed in several states as a real estate shell entity, willfully chooses to disengage from offering genuine real estate representation services to consumers, as the core premise to create successful collusion with other brokers through interstate wire communication to further the scheme by means of blanket referral agreements that “per se” violate 15 U.S.C. § 1. What this means is Zillow Flex uses a shell real estate license for the sole premise to collect kickbacks and form hub-and-spoke relationships by forming a network of between independent Realtors.

The lesson for Zillow (and the rest of the referral fee broker-to-broker collusion scams) is this: NEVER break more than one law at the same time. That is when you get caught.
 
Related to: antitrust, wire fraud, kickbacks, Zillow, U.S. Department of Justice, Federal Trade Commission, Consumer Financial Protection Bureau

Google for real estate

HomeOpenly Open Marketplace(tm) is Google for real estate

“Only other two-sided platforms can compete with a two-sided platform for transactions” Jonathan Hatch Danhui Xu

This distinction is ever relevant in the US online real estate sector. HomeOpenly is a two-sided marketplace where one side is consumers (home buyers and home sellers) and another side is Realtors. We need both to function.

Now, the question is: HomeLight a two-sided marketplace, as it claims? The answer is no.

HomeLight is a licensed broker, like any other. However, HomeLight does not perform any services of a Realtor, it organizes its competitors into a network — the same side of the market begins to agree on terms and sells services to consumers on the basis of agreements that restrain free trade outside of the scheme. Consumers hire two brokers with HomeLight, where one brokers does not do anything to earn a commission from a home sale or a home purchase.

In effect, HomeOpenly and HomeLight are never competitors, because it is impossible for a two-sided marketplace to compete with real estate brokers who are supposed to one of the sides on the platform as genuine users. At the same time, HomeLight as a brokerage that cannot become a genuine user on HomeOpenly because it does not offer any tangible services. I do not consider kickbacks and broker-to-broker collusion a tangible service, therefore, it can’t be offered on the platform.

HomeLight is a broker-to-broker collusion scheme, where “partner agents” unlawfully agree to pay massive kickbacks to receive consumers’ information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, C.F.R. § 1024.14.

Why can’t HomeLight simply abandon its brokerage status?

The HomeLight scam relies on a statutory loophole 12 C.F.R. § 1024.14(g)(1)(v) (Regulation X) and RESPA 12 U.S.C. § 2607(c)(3) that narrowly allow to receive payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and real estate brokers. This loophole, of course, does not allow for kickbacks between “shell” brokerage entities.

Shell entities, such as HomeLight, account for $15 billion in illicit kickbacks paid by consumers annually in a form of inflated broker commissions — the largest real estate scam in history. As long as brokers have a pathway to collusion, they will NOT compete for consumers with savings. Meaning, an unethical Realtor is more willing to pay kickbacks into HomeLight scam, rather than to offer that same money to consumers as savings on HomeOpenly.

Marketplaces compete with marketplaces, but active collusion between participants on the same side of the market causes damages to both: legit marketplaces and consumers.

To break this pattern of broker-to-broker collusion, specifically, to destroy Zillow Flex, Zillow 360, Xome, UpNest, Tomo Brokerage, SOLD.com, Rocket Homes, ReferralExchange, Redfin Partner Program, Realtor.com ReadyConnect Opcity, Ramsey Solutions ELP, Opendoor Brokerage, OJO Labs, Nobul, Neighborhoods.com (aka 55places), NAEBA, mellohome, Localize NYC, LemonBrew, Landed, IDEAL AGENT, HomeStory, HomeLight, homegenius by Radian, Home Captain, FastExpert, Estately by Realogy, EffectiveAgents.com, Clever Real Estate, Blend Realty, Better Real Estate, Agent Pronto, etc. is to build the “Google for real estate.”

Better.com Real Estate is wire fraud

Better.com Real Estate engages in plain price fixing of Realtor commissions outside their firm

Better remains one of the more controversial real estate companies due to its poor leadership fueled with massive VC capital. Their layoffs fiasco is merely the tip of the iceberg. The real problem with Better is price-fixing and unlawful kickbacks it receives from Realtors.
 
 “$2000 in Lender credits” refers to the amount by which your closing costs will be reduced if you use a real estate agent referred by Better Real Estate. The agent must be confirmed by Better Real Estate in a manner satisfactory to Better Mortgage Corporation in its sole discretion prior to issuance of the Closing Disclosure on the loan. The reduced rate will appear on the Closing Disclosure.”
 
Better Real Estate LLC offers a “discount” to consumers from a blanket referral fee earned, not from a commission earned. This is a form of price-fixing and is, effectively, a kickback derived from another kickback, instead of a legally negotiated buyer’s rebate mechanism.
 
 A “standard” referral fee (25%-35%) paid to Better Real Estate LLC on a buyer’s agent commission for a $1M home amounts to $9,000. This means that Better Real Estate LLC receives somewhere around $10,000 as a kickback from a random Realtor for the act of steering, while the consumer only gets $2,000 as a “discount.” This is not savings — this is plain collusion.
 
There is a lot to be said about the value of collusion: it is per se unlawful in the United States; it leads to higher profits at the expense of consumers; it reduces the competitiveness of the market; it limits open competition by deceiving, misleading and defrauding consumers. The core of collusion is that it is a weakness before a greater force called “the market.” The market is brutal and it has a long memory, especially in real estate.
 
When consumers begin to realize that Vishal Garg has cheated them out of tens of thousands in competitive tax-free buyer rebates, they will retaliate in more ways than one. Eventually, collusion yields terrible UX.
 
To build upon price-fixing with nearly a billion USD in funding is like building a luxury skyscraper on a foundation made of sand — it will fall, and it will fall fast and hard.
 
As always, it takes an outsider to break the status quo.

Related: Better Real Estate, antitrust, price fixing, wire fraud, kickbacks, RESPA, Sherman Act, FTC Act, market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, price-fixing practices, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, C.F.R. § 1024.14

Redfin Partner Program is wire fraud

Redfin Partner Program violates antitrust regulations and is a form of wire fraud

Whenever I see a Realtor set their listing commissions at 0.95% vs 1%, or buyer rebates at 51% vs 50% this is not gaming the system, this is competition at work. Competition among Realtors results in lower costs of buying and selling homes, as well as better customer UX.
 
Sure, one might say that a Realtor does this as a “trick” to be shown ahead of competing Realtors with nearly identical pricing, but I see it as an opportunity to deliver a message to consumers that pricing does matter.
 
There is, of course, another side to setting prices where a third party does it for the Realtor.
 
In a hub-and-spoke type price-fixing conspiracy, all prices for Realtors are typically set exactly the same. Moreover, instead of competing for consumers with lower pricing, the Realtors in the hub are really competing for placement based on how much in kickbacks the hub is expecting to receive.
 
“In early 2016, we changed the pricing and structure of the Redfin Partner Program. Instead of paying 15% of the commissions’ partner agents earned through the program to us, partner agents began paying us 30%. At the same time, we began directly issuing a $500 check to certain partner program customers, partially offsetting the increase in referral fees paid by partner agents.”
 
Redfin’s most recent statement on the company’s website reads: “Since Partner Agents aren’t employed by Redfin, we can’t guarantee our 1%–1.5% listing fee or offer a Redfin Refund for customers who work with a Partner Agent.”
 
There are several of problems with fixing rates for competitors and allocating consumers to those same competitors, primarily, a lack of genuine competition. That 0.05% listing savings or 1% extra in buyer rebates may seem irrelevant, but, it is, in fact, the fragile force of competition at work.
 
With absolute certainty, Glenn Kelman has committed wire fraud by transmitting collusion with competitors on the Internet.
 
Redfin Partner Program is unlawful, but it has not been exposed by the industry because the entire industry is complicit. The scheme relies on an illicit referral network of over 11,600 Redfin Partner agents.
 
Redfin Partner Agents are independent Realtors firmly affiliated with various brokerages such as Berkshire Hathaway HomeServices, eXp Realty, Windermere Real Estate, Keller Williams Realty, Inc., RE/MAX, Coldwell Banker, NextHome, Inc., HomeSmart, Compass, John L. Scott Real Estate, CENTURY 21®, Realty ONE Group, Vylla, ERA Real Estate, Weichert, Realtors, Better Homes and Gardens Real Estate, Fathom Realty, Intero Real Estate Services, John R. Wood Properties, Worth Clark Realty, Sotheby’s International Realty, etc. What do any of them have anything to do with Redfin?
 
As always, it takes an outsider to break the status quo.

Related to: Redfin Partners, antitrust, price fixing, wire fraud, kickbacks, RESPA, Sherman Act, FTC Act, market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, price-fixing practices, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, C.F.R. § 1024.14

Zillow 360 Rebate with a Kickback

A copy of the request filed with the DOJ, CFPB, and the FTC asking to review practices of Zillow Flex and Zillow 360 “shell” brokerage schemes.

A copy of the author’s official request that asks the United States Federal Trade Commission, the United States Department of Justice, and the United States Consumer Financial Protection Bureau to investigate Zillow, Inc. subsidiary “shell” real estate brokerages for Zillow Flex and Zillow 360, among other programs; Zillow Group Marketplace, Inc.; and Zillow Home Loans, LLC operating in open collusion with “Zillow Flex Partner Agents” and “Zillow 360 Partner Agents” on the grounds of an alleged violation of the Federal Trade Commission Act of 1914 (15 U.S.C. Section 45) an alleged violation of the Sherman Antitrust Act of 1890 (15 U.S.C. Section 1) an alleged violation of RESPA Section 8 (12 U.S.C. 2607) as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with alleged broker-to-broker market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices.

Attn: Citizen Complaint Center, Antitrust Division
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530

Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. NW Room CC-5422
Washington, DC 20580

Attn: CFPB Regulatory Implementation
Consumer Financial Protection Bureau
1700 G St., NW
Washington, DC 20552

Please find the information below with regards to possible antitrust laws and RESPA violations.

What companies or organizations are engaging in conduct you believe violates the antitrust laws?

Zillow Flex (via “shell” brokerages operated by Zillow, Inc.)
Zillow 360 (via “shell” brokerages operated by Zillow, Inc.)
1301 2nd Avenue, Floor 31
Seattle, WA 98101
Phone: (206) 470–7000
Licensed broker in Alabama 000128023–0
Licensed broker in Alaska 157723
Licensed broker in Arizona CO580407000
Licensed broker in Arkansas PB00085034
Licensed broker in California 1522444
Licensed broker in Colorado EC.100080923
Licensed broker in Connecticut (Zillow CT, LLC) REB.0793077
Licensed broker in Delaware RB-0020865
Licensed broker in District of Columbia REO98365391
Licensed broker in Florida CQ1058944
Licensed broker in Georgia 76885
Licensed broker in Hawaii RB-23130
Licensed broker in Idaho CO50816
Licensed broker in Illinois 478.012434
Licensed broker in Indiana RC51900252
Licensed broker in Iowa F06155000
Licensed broker in Kansas CO00003080
Licensed broker in Kentucky 237601
Licensed broker in Louisiana BROK.77092-CORP
Licensed broker in Maine AC90603333
Licensed broker in Maryland 5001260
Licensed broker in Massachusetts 7508
Licensed broker in Michigan 6505427377
Licensed broker in Minnesota 40638657
Licensed broker in Mississippi 23127
Licensed broker in Missouri 2020010153
Licensed broker in Montana RRE-BRO-LIC-79688
Licensed broker in Nebraska 202000935
Licensed broker in Nevada B.1002277.CORP
Licensed broker in New Hampshire 75732
Licensed broker in New Jersey 2076842
Licensed broker in New Mexico 9769
Licensed broker in New York 10991231981
Licensed broker in North Carolina C30388
Licensed broker in North Dakota 2826
Licensed broker in Ohio REC.2020001732
Licensed broker in Oklahoma 183652
Licensed broker in Oregon 201235057
Licensed broker in Pennsylvania RBR003965
Licensed broker in Rhode Island REC.0015982
Licensed broker in South Carolina 23960
Licensed broker in South Dakota 15196
Licensed broker in Tennessee 264500
Licensed broker in Texas 549646
Licensed broker in Utah 11735955-CN00
Licensed broker in Vermont 083.0650389-MAIN
Licensed broker in Virginia 226031797
Licensed broker in Washington 21212
Licensed broker in West Virginia 005388
Licensed broker in Wisconsin 835987–91
Licensed broker in Wyoming 235500

Zillow Group Marketplace, Inc.
1301 Second Ave., 30th floor, Suite 3000-A
Seattle, WA 98101
Phone: (206) 470–7000
NMLS 1303160

Zillow Home Loans, LLC
10975 El Monte
Overland Park, KS 66211
Phone: (206) 470–7000
NMLS 10287

Further, a partner network of an unknown number of real estate brokers who choose to execute blanket broker-to-broker referral agreements in an alleged collusion scheme via Zillow Flex and Zillow 360 paper brokerage schemes.

Acting as the “spokes” within the “hub-and-spoke” broker-to-broker collusion scheme, “Zillow Flex Partner Agents” and “Zillow 360 Partner Agents” are independent Realtors firmly affiliated with various brokerages such as Berkshire Hathaway HomeServices, eXp Realty, Windermere Real Estate, Keller Williams Realty, Inc., RE/MAX, Coldwell Banker, NextHome, Inc., HomeSmart, Compass, John L. Scott Real Estate, CENTURY 21, Realty ONE Group, Vylla, ERA Real Estate, Weichert Realtors, Better Homes and Gardens Real Estate, Fathom Realty, Intero Real Estate Services, John R. Wood Properties, Worth Clark Realty, Sotheby’s International Realty, etc.

Why do you believe this conduct may have harmed competition in violation of the antitrust laws?

Zillow Group Annual Report for the Fiscal Year Ended December 31, 2020 reads:

“We participate in large addressable markets of buying, selling, renting and financing residential real estate in the U.S. As we continue to move towards a transactional model focused on helping customers move, we estimate our TAM has expanded from $19 billion in U.S. residential real estate related advertising in 2019 (according to a Borrell Association report) to nearly $300 billion. Our TAM includes Zillow’s estimate of over $100 billion in referral fees derived from participating in real estate transactions with our partners (based on the 2021 National Association of REALTORS®U.S. Economic Outlook published in November 2021). In addition, we provide important adjacent services, including mortgages through Zillow Home Loans and title and escrow closing services through Zillow Closing Services. U.S. mortgage origination revenue represents a $155 billion annual opportunity (according to a 2021 Mortgage Bankers Association Report), while title and escrow represents a combined $26 billion annual opportunity (according to an American Land and Title press release dated April 7, 2021 and a report by Doma Holdings, Inc. published in May 2021).”

Zillow’s estimate of over $100 billion in unlawful kickbacks derived from participating in real estate transactions with thousands of colluding Realtors.

“In October 2018, we began testing a new Flex pricing model for Premier Agent and Premier Broker advertising services in limited markets. We now offer this pricing model to select partners, and provide it alongside our legacy market-based pricing model. With the Flex model, Premier Agents and Premier Brokers are provided with validated leads at no upfront cost and pay a performance advertising fee only when a real estate transaction is closed with one of the leads” where Zillow receives a kickback “for validated leads when we receive payment for a real estate transaction closed with a Flex lead.”

This is a problem for several reasons. First of all real estate agent commissions are protected from being “taxed” with kickbacks by RESPA Section 8 and Regulation X federal regulations. 12 C.F.R. § 1024.14(g)(1)(v) (Regulation X) and RESPA Section 8 12 U.S.C. § 2607(c)(3) narrowly allow payments pursuant to cooperative brokerage and referral arrangements between real estate agents and real estate brokers. This limited exemption on kickbacks only applies to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity. Zillow, as a licensed real estate shell entity, does not act in a brokerage capacity. This entity willfully chooses to disengage from offering real estate representation services to consumers. There is a big difference between a business arrangement where a party acts as a sham under the Real Estate Settlement Procedures Act (RESPA) or a bona fide provider of settlement services.

Zillow Flex shell real estate brokerage acts as a “bridge” for kickbacks to collect a “Thing of value” from random Realtors, disguised as “a performance advertising fee only when a real estate transaction is closed with one of the leads.” There is no such thing as “a performance advertising fee” between licensed brokers. Licensed brokers cannot legally advertise the services of competitors, to begin with.

Zillow Flex and Zillow 360 schemes violate 12 U.S.C. § 2607 and C.F.R. § 1024.14 because Zillow Group entity does not provide any legitimate real estate services as a licensed real estate agent — it operates as a shell entity to collect kickbacks from other agents under the perceived notion that such arrangement is sufficient to meet RESPA 12 U.S.C. § 2607(c)(3) allowance of payments pursuant to cooperative brokerage and referral arrangements between real estate agents and real estate brokers.

However, RESPA violation is not the “Elephant in the Room” problem here. The real problem here is the fact that Zillow Flex and Zillow 360 organize Realtors as a hub-and-spoke conspiracy that violates Sherman Antitrust Act, and subsequently, FTC Act: 15 U.S.C. § 1 and 15 U.S.C. § 45. Zillow Flex and Zillow 360 are broker-to-broker collusion schemes, where “Partner Agents” unlawfully agree to pay massive kickbacks to receive consumers’ information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices. It takes two parties to agree to collude, and in this case, there are: (1) Zillow Group shell brokerage and (2) thousands of colluding Realtors tied into the hub with identical terms.

It is a per se violation of the Sherman Act for real estate brokers to agree on a “standard” referral fee that will be paid for producing a client. Real estate professionals are not allowed to enter into “standard” referral agreements because such agreements always restrict free trade. To comply in good faith with RESPA (12 U.S.C. 2607) Section 8 exception for cooperative brokerage and referral arrangements, legitimate real estate agents are only able to render referral agreements in a particular instance for a particular transaction.

Whatever economic justification particular price-fixing agreements may be thought to have, the law does not permit an inquiry into their reasonableness. They are all banned. Zillow 360 offers consumers a rebate that is price-fixed for services offered by a third-party broker, meaning one broker Zillow, now sets rebates amounts for other brokers outside of their firm. By law, all Realtors must compete for consumers and set prices individually. This means that each Realtor must define their rebates by competing for consumers with other Realtors.

If we go back to the beginning of this report, where Zillow Group claims that their “TAM has expanded from $19 billion in U.S. residential real estate related advertising to nearly $300 billion” the reason to maintain these hub-and-spoke schemes becomes self-evident: greed. The United States is undergoing a housing affordability crisis, and Zillow Group now aims to collect kickbacks from tens of thousands of Realtors to further increase the costs of buying and selling homes. Both Zillow 360 and Zillow Flex are products of collusion where prices and levels of services are set by the hub to rake commissions earned by the spokes — independent Realtors.

Thousands of uncompetitive Realtors would rather fork over 40% of their future commissions to Zillow than offer that same money to their clients. For example, on a purchase of a $4 million home, with collusion with Zillow Flex, a buyer agent commission easily amounts to $100K where a colluding Realtor keeps $60K and Zillow Flex takes $40K as a kickback. On the open market, that same Realtor can offer this $40K kickback to their client as a genuine rebate, making the entire home purchase more affordable. This is the difference between kickbacks and rebates — the same money, ending up in two very different bank accounts.

We, as consumers, are not the only victims of Zillow Flex and Zillow 360 schemes. Whenever Realtors begin to organize their operations into networks, whenever Realtors refuse to provide a tangible service, whenever Realtors allocate consumers for kickbacks, whenever Realtors set prices for one another — the open competition in the entire sector suffers.

Competitive Realtors who refuse to participate in wire fraud arrangements with Zillow receive less business. Genuine competitive online marketplaces where Realtors compete for consumers, such as HomeOpenly, receive less attention from Realtors and consumers, leading to lesser network effects. Genuine Realtors who offer genuine listing savings and buyer rebates promoted online receive fewer benefits for doing so — their savings no longer have the required “bang for the buck” incentive to attract a large number of customers.

Zillow Flex and Zillow 360 are not merely products of broker-to-broker collusion, these are products of wire fraud as defined by 18 U.S.C. § 1346 and 18 U.S.C. § 1343 because the network effects of the Internet and Zillow’s dominant position in the market work together to further the scheme across all 50 US states and Washington DC.

What is your role in the situation? For instance, are you a user, customer, competitor or supplier?

I currently maintain HomeOpenly marketplace. HomeOpenly is an Open Real Estate Marketplace™ designed and built to improve the homeownership experience in the United States.

HomeOpenly is a technology company that designs, builds, and maintains a series of online marketplace solutions with a focus on a home search, automated valuation modeling (AVM), home buyer’s and seller’s representation services, mortgage origination, refinance, home insurance, renovation, design, staging, home inspections, home security, moving, home maintenance, title, escrow, cash offer stand-in programs, home warranty, and other real estate products and services.

HomeOpenly operates subject to a 0% rake as our primary competitive advantage to establish a competitive fee schedule for service providers in the real estate industry with the use of network effects. HomeOpenly is not a paper broker and all service providers on our network compete for consumers individually. Our efforts are actively hampered by the anticompetitive practices of Zillow Flex and Zillow 360.

Successful implementation of an Open Marketplace™ platform in the real estate industry requires full enforcement of existing antitrust laws that are enacted to protect US consumers.

As long as paper brokers can allocate consumers as leads between independent service providers in exchange for blanket referral fees, Open Marketplace™ continues to operate at a competitive disadvantage. Consumer welfare is always improved by open markets, the same way it is always diminished with collusion.

If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice

If you have a question or comment about federal consumer protection financial laws, including RESPA, you may submit it to the Office of Enforcement of the United States Consumer Financial Protection Bureau

Wire fraud in United States e-commerce

Violations of the Sherman Antitrust Act, FTC Act, RESPA, and Coinage Act in the United States online e-commerce are wire fraud.

A copy of the author’s request that officially asks the United States Federal Trade Commission (US-FTC), the United States Department of Justice (US-DOJ), and the United States Consumer Financial Protection Bureau (US-CFPB) to investigate Uber (NYSE: UBER) Lyft (NASDAQ: LYFT) Amazon Home Services (NASDAQ: AMZN) Handy HQ (HomeAdvisor, NASDAQ: IAC) Porch Group (NASDAQ: PRCH) DoorDash (NYSE: DASH) Gopuff (GoBrands, Inc.) Grubhub (NASDAQ: GRUB) Amazon Marketplace (NASDAQ: AMZN) Walmart Marketplace (NYSE: WMT) Realtor.com ReadyConnect Opcity (NASDAQ: NWSA) Zillow Flex (NASDAQ: ZG) Zillow 360 (NASDAQ: ZG) Opendoor Brokerage (NASDAQ: OPEN) Redfin Partner Program (NASDAQ: RDFN) Xome Concierge (NASDAQ: COOP) Rocket Homes (NYSE: RKT) mellohome (NYSE: LDI) HomeLight (HomeLight, Inc.) OJO Labs (OJO Labs, Inc.) Better Real Estate (Better Holdco, Inc.) Blend Realty (NYSE: BLND) Offerpad (NYSE: OPAD) Opendoor (NASDAQ: OPEN) Coinbase (NASDAQ: COIN) FTX (West Realm Shires Services, Inc.) Gemini (Gemini Trust Company, LLC) Crypto.com Exchange (Foris DAX, Inc.) Binance (BAM Trading Services Inc.) Kraken Digital Asset Exchange (Payward, Inc.) Cash App (Cash App Investing LLC) Amazon Flex (NASDAQ: AMZN) Apple Pay (NASDAQ: AAPL) Google Pay (NASDAQ: GOOGL) Google Adsense (NASDAQ: GOOGL) for possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with alleged market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, issuing and passing digital pirate currencies intended for use as current money, and price-fixing practices.

Attn: Antitrust Division Office of Operations
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530

Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave., NW Room CC-5422
Washington, DC 20580

Attn: CFPB Regulatory Implementation
Consumer Financial Protection Bureau
1700 G St., NW
Washington, DC 20552

The year 2022 is very likely the final year of a long-standing battle in e-commerce that will redefine the United States e-commerce as either: (1) highly raked, collusive, price-fixed, pay-to-play, allocated, low-quality, false ads channel, or (2) a pattern of novel open e-commerce channels. There is really nothing in between.

Violations of 15 U.S.C. § 1 Sherman Antitrust Act, violations of 15 U.S.C. § 45 FTC Act, violations of 12 U.S.C. § 2607 and C.F.R. § 1024.14 RESPA are presently and successfully aided by electronic interstate communications, otherwise known as wire fraud.

Further, violations of Article I, Section 8, Clause 5 of the United States Constitution in the United States that prohibits exchange, maintenance, coinage, issuing, and passing alternative digital currencies intended for use as current money, is not merely wire fraud but further, a conspiracy against the United States.

The severity of the damages and scale of these schemes must become the new normal for the DOJ, FTC, and CFPB when it approaches the sector dominated by (5EA) companies at the top of Nasdaq 100 that control over 60% of the entire Nasdaq 100 by market capitalization value.

Collusion agreements and pirate currency systems, supported by network effects of the Internet, have proven to be highly effective. Today, price-fixing and market allocation agreements are openly offered “as a service” to consumers in a “hub-and-spoke” fashion in massive trillion-dollar markets: online travel stay booking, residential online real estate, online home services, online ride-hailing, online food delivery, and other sectors of the United States economy.

Further, alternative digital currencies have now grown into a cult (see Web3) of VC-backed consumer-facing schemes and exchanges that operate in a number of sectors, where wire transfer and wire exchange fees alone are valued in tens of billions USD. The pirate digital currencies are a form of wire fraud that creates a supply of seemingly legitimate counterfeit money, in direct competition with the legal tender of the United States.

These schemes are not harmless.

(1) They are harmful to United States consumers.

(2) They are harmful to open e-commerce in the United States.

(3) They are harmful to legitimate online platforms that develop and maintain compliant digital services in the United States.

(4) They are harmful to individual compliant businesses that operate outside of named “hub-and-spoke” conspiracies.

(5) They are, eventually, harmful (yet seemingly beneficial in the short term) to the millions of “spokes” that collude with a handful of “hubs” in the United States.

(6) They are harmful to the United States government consumer protection agencies that must spend taxpayer resources to investigate and prosecute them.

(7) They are harmful to the United States court systems that must spend taxpayer resources to listen to their appeals.

(8) They are harmful to all United States citizens, friends, and visitors, even if they do not directly engage with these schemes, by the mere presence of wire fraud on the Internet.

(9) They are harmful to compliant innovation in any sector where they exist.

Subjected to these schemes, people, eventually, do not receive a full benefit of trust on the Internet, leading to lower aggregate sales volume via the Internet and the subsequent damages to the entire information sector around the world.

The United States consumer protection agencies must take these facts at full value because the schemes and companies listed in this report are real, and they are not new.

The aggregate damages that scaled wire fraud produces by means of false advertising, market allocation, consumer allocation, price-fixing collusion, exchange and distribution of illicit currencies, and hub-and-spoke conspiracies are as clear as day. Go look at them, and see what they do, count how many millions of third-party sellers signed allocation and price fixing (price parity) agreements with Amazon. These numbers don’t lie. There is no secret here.

There is, however, a pattern of wire fraud. From the millions of price-fixing agreements between Uber and local Uber drivers to hundreds of thousands price-fixing agreements between Realtor.com-Opcity and local Realtors – they are all exactly the same, a hallmark of a hub-and-spoke conspiracy schemes where spokes no longer act in any meaningful competition with one another, and act as hub’s integral vassals.

The United States is not the land governed by feudal tenure. The United States is the land of the free speech. The United States is the land of the free competition. The United States is the land of the law. The United States is the land of open and fair commerce.

These collusion schemes operate in plain sight because the Internet is not a plain sight environment. Wire fraud can be (and is currently being) aided by a “lipstick on a pig” flashy websites, and/or Super Bowl ads, Google Ads, and Facebook Ads, and other mainstream consumer exposure channels.

Open e-commerce is a pattern of communicating the availability of products and services to consumers because that relies on the fragile yet very powerful forces of an open competition between third parties, aka network effects produced by the Internet. Open e-commerce is a pattern of complaint platforms that encourage competition between third parties, rather than force third parties into agreements that restrain free trade.

The open competition relies on a single most powerful law for support: Section 1 of the Sherman Antitrust Act. Without the proper enforcement of Sherman Act, open e-commerce is powerless against raked e-commerce. This law must be enforced if the Internet is to produce a service of competitive and transparent wiring. The wiring of the Internet is not accidental, it is deliberate.

Some of the largest digital platforms in the United States, such as Amazon Marketplace and Uber, are a product of deliberate hub-and-spoke consumer allocation and price-fixing between millions of small competitors tied into these hubs by the Internet. The Internet becomes integral to these schemes because it allows a much greater form of communication freedom than any other communication methods before it.

For example, Amazon third-party sellers remain small competitors to Amazon, bound as independent entities into a network secured by approximately two million identical and uncompetitive consumer allocation agreements with the hub. Each one of these illicit agreements places third-party sellers into collusion with Amazon, rather than competition to build a better Amazon elsewhere — why build a better Amazon if one can settle for collusion with it? There is no reason, in fact, some Amazon sellers are now massive VC-backed companies.

The United States attorney is obligated to advocate, on behalf of consumers, for the maximum fines available for these violations. The false notion that “big is bad” will not deliver these fines. This is why, thus far, the government has delivered no significant fines, and it has delivered no significant progress in e-commerce. The money derived by means of wire fraud is there. The law is there. You have the information and resources that you need. Where is your progress?

The United States attorneys have not delivered on the antitrust front because you had refused to accept the full weight of the fact that e-commerce is highly raked, and it consists of trademarked and nationally-known massive schemes that all utilize the Internet to promote activities outlawed under the federal law by means of wire communications between state borders.

Wire fraud is a federal crime, not a misdemeanor, and the United States government cannot allow individuals and corporations to earn a profit on such a massive scale by means reducing the integrity of the entire Internet, by means of reducing competition, by means of illicit agreements that restrain free trade, coupled by false advertising.

The following list of individual Internet schemes must become the aggregate core target for the United States government in 2022. These schemes are at the center of some of the biggest, the most damaged, and the most problematic B2C markets in the United States:

(1) B2C sales of Realtor services

(2) B2C sales of professional home services

(3) B2C sales of hotel stays

(4) B2C sales of consumer goods

(5) B2C sales of local transportation

(6) B2C sales of food delivery

(7) B2C sales of Cryptocurrencies (whatever that is)

(8) B2C sales of mobile phone applications and digital services

The following entities currently engage in price-fixing outside their “firm” with third party independent contractors via mobile online applications and websites across state borders:

Uber Technologies price fixes rates with a network of millions third party drivers and food delivery drivers (NYSE: UBER)

Lyft Platform price fixes rates with a network of millions third party drivers (NASDAQ: LYFT)

Amazon Home Services price fixes rates with a network of thousands third party home services pros (NASDAQ: AMZN)

Handy HQ price fixes rates with a network of thousands third party home services pros (HomeAdvisor, NASDAQ: IAC)

Porch Group price fixes pay rates with a network of thousands third party home services pros (NASDAQ: PRCH)

DoorDash price fixes pay rates with a network of millions third party delivery drivers (NYSE: DASH)

Gopuff price fixes pay rates with a network of millions third party delivery drivers (GoBrands, Inc.)

Grubhub price fixes pay rates with a network of millions third party delivery drivers (NASDAQ: GRUB)

The following entities currently engage in consumer allocation outside their “firm” with third party independent sellers via mobile online applications and websites across state borders:

Amazon Marketplace allocates consumers and price fixes terms with a network of millions third party sellers (NASDAQ: AMZN)

Walmart Marketplace allocates consumers and price fixes terms with a network of millions third party sellers (NYSE: WMT)

The following “shell” real estate entities currently engage in consumer allocation and price fixing outside their “firm” with third party independent Realtors via mobile online applications and websites across state borders:

Realtor ReadyConnect Opcity allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NASDAQ: NWSA)

Zillow Flex allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NASDAQ: ZG)

Zillow 360 allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NASDAQ: ZG)

Opendoor Brokerage allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NASDAQ: OPEN)

Redfin Partner Program allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NASDAQ: RDFN)

Xome Concierge allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NASDAQ: COOP)

Rocket Homes allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NYSE: RKT)

mellohome allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NYSE: LDI)

HomeLight allocates and price fixes commission rates with third party Realtors networked into tens of thousands (HomeLight, Inc.)

OJO Labs allocates and price fixes commission rates with third party Realtors networked into tens of thousands (OJO Labs, Inc.)

Better Real Estate allocates and price fixes commission rates with third party Realtors networked into tens of thousands(Better Holdco, Inc.)

Blend Realty allocates and price fixes commission rates with third party Realtors networked into tens of thousands (NYSE: BLND)

The following direct cash home buying (iBuying) real estate entities currently engage in false advertising and make illicit “consumer steering” offers to third-party Realtors outside their “firm” via mobile online applications and websites across state borders:

Offerpad offers illicit steering incentives to Realtors (NYSE: OPAD)

Opendoor offers illicit steering incentives to Realtors (NASDAQ: OPEN)

The following entities currently engage in exchange, maintenance, coinage, issuing, and passing alternative digital currencies intended for use as current money via mobile online applications and websites across state borders:

Coinbase sells pirate digital currencies intended for use as current money (NASDAQ: COIN)

FTX.US sells pirate digital currencies intended for use as current money (West Realm Shires Services, Inc.)

Gemini sells pirate digital currencies intended for use as current money (Gemini Trust Company, LLC)

Crypto.com Exchange sells pirate digital currencies intended for use as current money (Foris DAX, Inc.)

Binance.US sells pirate digital currencies intended for use as current money (BAM Trading Services Inc.)

Kraken sells pirate digital currencies intended for use as current money (Payward, Inc.)

Cash App sells pirate digital currencies intended for use as current money (Cash App Investing LLC)

The following entities currently engage in employee misclassification via mobile online applications and websites across state borders:

Amazon Flex misclassifies delivery drivers as independent contractors  (NASDAQ: AMZN)

The following entities currently engage in tying of digital services and market allocation via mobile online applications and websites across state borders:

Apple Pay unlawfully ties into Apple App Store (NASDAQ: AAPL)

Google Pay unlawfully ties into Google Play Store (NASDAQ: GOOGL)

Google Adsense allocates digital advertising space with a network of competing third party media publishers (NASDAQ: GOOGL)

Successful implementation of open e-commerce in United States requires full enforcement of existing antitrust laws that are enacted to protect consumers.

If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice.

If you have a question or comment about federal consumer protection financial laws, including RESPA, you may submit it to the Office of Enforcement of the United States Consumer Financial Protection Bureau

Compass vs HomeOpenly

All mentions of Compass real estate trademarks on the HomeOpenly online platform are considered nominative fair use.

This article explores the distinct difference between a tech-enabled online brokerages and a media services that operate in the United States residential online real estate sector, specifically, the difference between Compass brokerage and HomeOpenly marketplace.

Compass claims that it “is building the first modern real estate platform, pairing the industry’s top talent with technology to make the search and sell experience intelligent and seamless.” This is not true. Compass is building a residential real estate firm with a website.

In another word, Compass, Inc. is an American licensed real estate broker that utilizes the Internet as a marketing medium with the use of real estate technology. Compass employs more than 25,000 agents (working as independent contractors) who earn a percentage of the selling price and give a percentage of each commission to Compass, consistent with the traditional real estate brokerage business model.

Consistent with the traditional real estate brokerage business model remains a key sentence here.

HomeOpenly offers nothing traditional in online real estate.

HomeOpenly is a highly disruptive online platform and a savings aggregation mechanism designed to bring real estate sector into full transparency on fees and levels of services — also known as genuine open competition between Realtors.

HomeOpenly is a technology media company, nothing less, nothing more. HomeOpenly operates with inputs and outputs of data. This mode of operations is a hallmark of a genuine technology company. The reason for this is simple:

Technology companies deliver revenue from value-added data operations.

Real estate brokers deliver revenue from fees, aka real estate commissions.

These products are nothing alike. Real estate brokers utilize the Internet to promote fees in scale, while technology companies utilize Internet to offer data in scale.

Compass has recently served HomeOpenly not one, but two consecutive notices, with claims that HomeOpenly somehow has violated their trademarks:

https://homeopenly.com/docs/Notice-Infringement-Compass-Trademarks.pdf

https://homeopenly.com/docs/RE-Notice-Infringement-Compass-Trademarks.pdf

https://homeopenly.com/docs/Second-Notice-Infringement-Compass-Trademarks.pdf

https://homeopenly.com/docs/RE-Second-Notice-Infringement-Compass-Trademarks.pdf

HomeOpenly cannot possibly violate Compass trademarks simply because we operate in completely different spheres.

HomeOpenly is an innovative and young internet company that designs, builds, and maintains a series of online marketplace solutions with a focus on a home search, automated valuation modeling (AVM), homebuyer’s and seller’s representation services, mortgage origination, refinance, home insurance, renovation, design, staging, home inspections, home security, moving, home maintenance, title, escrow, cash offer stand-in programs, home warranty, and other real estate products and services.

In another word, HomeOpenly aggregates services and savings fulfilled by independent Realtors who choose to use the platform to advertise competitive savings.

Compass, on the other hand, provides real estate sales management; real estate brokerage; real estate consultation; real estate listing; real estate valuation services; providing real estate listings and real estate information via the internet; real estate title insurance underwriting services; real estate escrow services; real estate lending services; financing and loan services; mortgage lending, financing, planning, brokerage, and refinancing services; insurance services, namely, underwriting compensation, casualty, errors and omissions, liability, accident, and business insurance; real estate services, namely, real estate agency and acquisition services in the field of residential and commercial real estate; housing services, namely, real estate agency and acquisition services in the field of residential and commercial real estate; real estate agency and acquisition services in the field of residential and commercial real estate.

In another word, Compass is a licensed real estate broker, licensed to do business as Compass RE in Delaware, Idaho, New Jersey, Pennsylvania and Tennessee, Compass Real Estate in Washington, DC, Wyoming and Idaho, Compass Realty Group in Missouri and Kansas, and Compass South Carolina LLC in South Carolina. California License # 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467.

Any allegations of “unauthorized” use of Compass trademark by HomeOpenly are false. The use is authorized by the Compass agents who use the platform to promote their service. The location of the trademark is used to identify Compass agents’ services, not HomeOpenly.

HomeOpenly is a genuine online marketplace and we are allowed to properly identify services of independent Realtors, as such. There are a number of places on HomeOpenly platform where Compass trademarks are displayed, and, absolutely in all these cases, the displays are used to identify and promote select Compass agents.

Antitrust Claims by HomeOpenly vs Compass

Thousands of unethical Compass agents are currently in broker-to-broker collusion via referral fee schemes, some or all, as following:

Zillow Flex Program and Zillow 360

Realtor.com ReadyConnect (Opcity)

Redfin Partner Agent Program

Opendoor Partner Agent Program

Rocket Homes

mellohome

HomeLight

UpNest

Clever Real Estate

Sold

Landed

LemonBrew

OJO.com (Digs and Movoto)

Xome

Better Real Estate

Tomo Brokerage (hellotomo)

Blend Realty

IdealAgent

and similarly situated “shell” real estate brokerages.

This practice violates Federal Trade Commission Act of 1914, Sherman Antitrust Act of 1890, RESPA (12 U.S.C. 2607) Section 8, as well as fair advertising and state antitrust and consumer protection laws currently ratified and enforced in connection with broker-to-broker market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices.

Compass agents who participate in these hub-and-spoke collusion schemes do so to earn uncompetitive and overpriced commissions, harm consumers as a class, harm legitimate and honest Realtors as a class, and harm HomeOpenly platform as a result.

Compass brokerage itself admits that “actions by our agents are our actions” and as a licensed broker of record in these kickbacks-driven and price-fixed schemes, Compass brokerage unlawfully profits from broker-to-broker collusion.

The resolution to this dilemma is uncertain

Whenever a mega-rounds SoftBank puppet platform, such as Compass, sends two consecutive threats to a self-funded startup, the battle emerges of not just right vs wrong, but big vs small.

Compass, obviously, has resources to smash HomeOpenly with an unlawful SLAPP, force it to remove Compass agents from the platform so that none of them are able to compete for consumers with genuine savings.

However, this is exactly where antitrust laws come into play. Does Compass really fear HomeOpenly’s Open Marketplace(tm)? Yes, it does, because HomeOpenly is built on transparency, and not kickbacks. HomeOpenly is a legitimate technology services, unlike Compass.

Compass, on the other hand, has a big antitrust problem it cannot face, or even acknowledge — some Compass agents are in an open collusion with “shell” or “sham” paper brokers that unlawfully organize independent Realtors into networks in an effort to collect kickbacks from consumers’ real estate transactions.

Realtor.com ReadyConnect (Opcity) Wire Fraud

Realtor.com ReadyConnect (Opcity) is a product broker-to-broker market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices.

Consumer Federation of America (CFA) report “Does Transaction Brokerage in Florida Serve the Interest of Home Buyers and Sellers?” and the associated Inman article are factually incorrect.

“All four of the MLSs have data fields where listing agents state how much they’re offering buyer brokers based on agency status. In virtually all of the sales with listed compensation — 98 percent — listing brokers offered the same compensation to transaction brokers that they did to single agents, typically either 2.5 percent or 3 percent, according to the report. The compensation offered only differed in 24 of the 2,000 sales examined. “Transaction brokers should be receiving lower compensation than single agents because these brokers have fewer legal responsibilities and less liability,” CFA said.”

CFA does not know what any of these brokers and agents were actually paid in compensation, it only knows the amount of BAC (Buyer Agent Commissions, typically offered at 2.5 percent or 3 percent) that was offered on the MLS in this study.

The State of Florida law allows buyers to negotiate a rebate with their broker from the BAC amount received. This means that each agent competes for clients by offering legitimate rebates from the buyer agent commissions, something that CFA, knowingly or unknowingly, fails to account for.

Rebates currently are prohibited by law, however, in ten states: Alabama; Alaska; Kansas; Louisiana; Mississippi; Missouri; New Jersey; North Dakota; Oklahoma; and Oregon. In addition, Iowa prohibits rebates when the customer uses the services of two or more brokers during a real estate transaction.

However, there are commission price-fixing schemes that currently operate in Florida as well, such as:

Opcity ReadyConnect aka Realtor

Redfin Partner Program

UpNest

Tomo Brokerage

Opendoor Brokerage Partner Agents Program

Clever Real Estate aka listwithclever

Better Real Estate Partner Agent Program

Blend Realty

mellohome aka loanDepot

Xome aka Mr. Cooper

IdealAgent

as well as a number of other similarly-situated scams

These schemes operate by price fixing commissions of independent real estate professionals as a way to earn blanket referral fees. These schemes blatantly “dangle” price-fixed uncompetitive home buyer rebates before consumers while enriching themselves with kickbacks.

Otherwise, broker commissions are not fixed in Florida and consumers can and should negotiate savings with their agents based on the level of service.

Nothing prevents consumers from negotiating a competitive buyer rebate in Florida from the BAC amount offered to the buyer agent on the MLS, unless a broker collusion and commission kickbacks are involved.

On the subject of growing problem of price-fixing and kickbacks, News Corporation Reports Second Quarter Results for Fiscal 2022 reads: “The referral model benefited from record average home values and higher referral fees, partially offset by lower transaction volume. The referral model generated approximately 32% of total Move revenues in the quarter.”

Opcity is not a legitimate real estate broker, but a sham Texas brokerage that organizes independent Realtors into a collusion hub-and-spoke network and sets blanket rebates for them (all rebates in the Opcity scam are fixed at the same amount for every broker in the scheme, a telltale of price fixing.)

Under the law, price-fixing and bid rigging schemes are per se violations of the Sherman Act. This means that where such a collusive scheme has been established, it cannot be justified under the law by arguments or evidence that, for example, the agreed-upon prices were reasonable, the agreement was necessary to prevent or eliminate price cutting or ruinous competition, or the conspirators were merely trying to make sure that each got a fair share of the market.

This means that Move, Inc, the legal owner of Opcity scam, cannot argue in federal court that the “Client Rewards” rebates are benefits to consumers, since they are price-fixed by the “hub” in order to eliminate competition between the “spokes.”

The “32% of total Move” “referral” revenue is plain wire fraud built on the basis of consumer allocation, price fixing, and unlawful kickbacks between licensed real estate brokers.

Price fixing is a felony everywhere in the US, and so is the act of administering it over the Internet.

The U.S. Department of Justice wire fraud statute (18 U.S.C. 1343) cites these four elements of wire fraud:

(1) The defendant created or participated in a scheme to defraud another out of money or property
(2) The defendant did so with the intent to defraud
(3) It was reasonably foreseeable that the defendant would use wire communications
(4) The defendant did, in fact, use interstate wire communications

Opcity ReadyConnect scheme meets all four of these definitions, as a matter of fact.