Consumer groups urge DOJ, FTC to review Compass-MLS agreements 

With a preliminary injunction hearing currently underway in Chicago in the lawsuit between Zillow and Midwest Real Estate Data (MRED) and Compass, consumer advocacy organizations have released a public letter addressed to the Federal Trade Commission and U.S. Department of Justice asking them to take a closer look at agreements made between the brokerage giant and multiple listing services across the country.

'Serious consumer protection concerns': The Consumer Federation of America (CFA) led the request to the federal agencies to investigate the "potential unlawfulness of Compass' recent deals," the organization said in a press release on Wednesday, saying the deals "threaten to reduce transparency, entrench market domination, and limit fair access to housing opportunities."

The CFA called out Compass' recent agreements with MRED, Bright MLS, Realtracs and The MLS/CLAW, arguing that those partnerships were intended to expand and enshrine off-market listing networks that forego traditional public distribution, raising "serious consumer protection, competition, and fair housing concerns."

The agreements also reduce transparency and weaken competition in the market, the CFA asserted. Although MLSs were established to promote broad access to listings and facilitate competition, Compass' arrangement with certain MLSs "withholds listings from broad public visibility during critical marketing periods," the letter stated.

Private listings, the CFA also warned, create more opportunities for double-ended transactions within a brokerage, which can result in lower sale prices for sellers and keep some properties invisible to buyers.

Civil rights harms: The letter also pointed to a study conducted by Zillow that showed the potential for exclusion of protected classes in private listing networks. The study revealed that homes in majority-white neighborhoods in Chicago were disproportionately marketed through private networks in contrast to homes in majority non-white neighborhoods.

"The Department of Justice should closely examine whether the nationwide expansion of private listing systems may facilitate discriminatory outcomes or disparate impacts," the letter urged.

A growing threat? The consumer advocates who signed the letter, which included the American Economic Liberties Project, the National Consumer Law Center and others, said the threat to consumers was becoming more pressing as Compass' market share has increased by way of "aggressive expansion through acquisitions and strategic partnerships."

The letter highlighted Compass' acquisition of Anywhere, which the CFA alleges was "approved under questionable circumstances," referencing Senators Warren and Wyden's December letter to the DOJ and FTC asking them to "closely scrutinize" the transaction because of antitrust concerns.

The letter likewise noted that Zillow is currently challenging MRED and Compass in court over antitrust concerns, arguing that real estate markets perform best when listings are widely accessible and there is "robust" competition.

"One company should not be able to monopolize access to the American Dream," the letter concluded.

Compass did not immediately respond to a request for comment.

This week in court: On Wednesday and Thursday of this week, a Chicago court is hearing witnesses from Zillow, MRED, Compass and other industry entities to determine whether to place a preliminary injunction on MRED that would prevent the MLS from cutting Zillow's feeds, which it did temporarily in May.

At the beginning of this week, MRED attempted to circumvent the court appearance by moving to compel arbitration with Zillow. However, the court allowed the hearing to continue as scheduled.

Post-hearing briefs will be due on July 9, and responses to those briefs will be due by July 13. After that, Judge John Tharp, Jr. is expected to make a ruling on the preliminary injunction. Zillow has continued to receive access to MRED's data feed through a temporary restraining order.

Note: Reporting by real estate industry trade publications, including Real Estate News, was cited in the CFA's letter.