Lawmakers urge FTC to probe real estate referral practices

Two federal lawmakers are urging Federal Trade Commission (FTC) Chairman Andrew Ferguson to investigate the referral practices of online real estate platforms. 

In a letter sent to Chairman Ferguson last Friday, Representatives Jennifer McClellan and Donald Beyer, both Democrats from Virginia, claimed that “certain deceptive or insufficiently transparent internet advertising and solicitation practices may be steering consumers in ways that are not readily apparent.” 

According to the lawmakers, in some instances these referral practices could impact a buyer’s choice of agent or lender, without any type of referral or financial relationship being disclosed to the consumers. The letter highlighted “contact agent” buttons employed by some online real estate portals that connect consumers to an agent paying the portal for leads and not the listing agent of the property the consumer is interested in. 

“This undermines informed consumer decision-making and distorts competition,” the letter states. “When consumers are not fully informed, they may incur higher transaction costs or receive less favorable financial terms than they would in a more transparent marketplace.”

The lawmakers argue that “ensuring consumers can make informed decisions, free from confusion or hidden incentives, is essential to promoting fair competition and improving housing affordability.” Representatives McClellan and Beyer added in their letter that referral fees could be driving up the cost of purchasing a home, further hindering Americans already facing housing affordability challenges. 

“As affordability challenges continue to push homeownership further out of reach for many Americans, it is critical that consumers can rely on transparent and fair practices when navigating the homebuying process,” the letter states. 

In an emailed statement to HousingWire, Representative McClellan echoed this sentiment.

“The skyrocketing cost of living in this country has only put home ownership further and further out of reach for the American people,” the congresswoman wrote in her statement. “Deceptive and non-transparent advertising practices in the online real estate marketplace make this worse by creating greater confusion, frustration or disillusionment with the process. As prospective homeowners struggle to find quality housing that they can afford, I joined Congressman Beyer to send a clear message to the Federal Trade Commission: we can and should do more to give people the tools and support they need to fulfill the American dream of owning a home.”

The FTC is currently involved in a lawsuit against two real estate listing portals, Zillow and Redfin, claiming that the multifamily rental syndication deal executed by Zillow and Redfin in early 2025 was tantamount to Zillow simply paying Redfin $100 million in exchange for it no longer competing in the multifamily rental listing space. In early May, a Virginia-based U.S. District Court judge denied the defendants’ motion to dismiss the lawsuit.

Separately, Zillow is facing another consumer lawsuit, known as Taylor, in which the plaintiffs claim that Zillow tricks consumers into using agents affiliated with Zillow through its Flex and Premier Agent programs, resulting in inflated home prices. The plaintiffs in this lawsuit are currently seeking to file an amended complaint with expanded allegations. Zillow is currently asking the judge to deny this request and rule on the two pending motions to dismiss the case.

Zillow did not wish to comment on the letter sent by the lawmakers and Redfin did not immediately return HousingWire’s request for comment.