Zillow Sued for 'Junk Fees' on Rental Payments Paid via its Rental Manager Service

Zillow has been thrown into a fresh lawsuit after a woman in New Jersey sued the portal operator for charging unjust fees.

Sara Nour is seeking monetary damages, restitution and public injunctive relief arising from Defendant's deceptive and unfair imposition of junk "Transaction Fees" on rent payments completed through Defendant's Zillow Rental Manager service.

A lawsuit filed in the District of Columbia alleges that transaction fees are forced on consumers at the very last step of the checkout process using a “negative option” process. This process—condemned by the Federal Trade Commission (FTC) as inherently deceptive—automatically adds "supposedly optional junk fees, then forces consumers to find a way to remove them."

Zillow is accused of providing no fair disclosure on how to remove the add-on fees, without justifying these fees or providing any additional value.

Additionally, the lawsuit alleges that Zillow's transaction fee is deceptive because Zillow does not inform consumers that the fee is not permitted by their residential leases.

The lawsuit says:

The proliferation of rental housing junk fees like Defendant’s Transaction Fee has negatively impacted millions of renter households nationwide. undisclosed fees tacked onto rent payments pose a real threat to consumers’ financial stability, particularly considering that they force tenants to spend significant and unbudgeted sums of money each month on top of rent.

Consumers making their rental payments through Zillow Rental Manager are automatically charged the Transaction Fee and are not informed of the amount Defendant charges
for the Transaction Fee until the final “Confirm” payment screen. At no point during the rental payment process are consumers informed of alternative means to pay their rent to avoid the Transaction Fee, leading consumers to believe the fee is mandatory and unavoidable.

This pre-selection and automatic opting-in of consumers to junk fees is itself deceptive. [Zillow's] inadequate and untimely disclosure of the Transaction Fee, as well as Defendant’s failure to adequately inform consumers of alternative ways to pay their rent to avoid the Transaction Fee, render the Transaction Fee nothing more than a junk fee couched in an
unlawful pay-to-pay scheme. By programming its online, payment platform with a “negative option” to automatically opt-in consumers to pay Transaction Fees, [Zillow] ensures that most consumers will unknowingly pay them.

According to Nour, she previously rented an apartment in D.C., paying a monthly rent of $2,550 via Zillow Rental Manager. Each time she did so, Zillow charged her an automatically-added transaction fee—labelled as a “card fee” on her receipt—amounting on at least one occasion to $75.22. Because Zillow did not “adequately or transparently” present the fee as an optional charge, Nour claims, she paid it every month, believing the charge to be mandatory, and would have paid via a different method had she known the fee was avoidable.

Zillow is already embroiled in a similar case after Oregon resident Alucard Taylor filed a class action against Zillow for allegedly tricking consumers into using its own agents and charging undisclosed fees to increase house prices. Taylor's case, ongoing, accuses Zillow of surreptitiously redirecting leads to Zillow-affiliated buyer agents, who Taylor argues are incentivised to artificially inflate the final selling price to cover the cost of their commission split with Zillow (up to 40%).

Online Marketplaces has reached out to Zillow for comment.