The National Association of Real Estate Agents (NAR) is facing another lawsuit. The latest lawsuit, which seeks class action status, was filed Friday by eight real estate agents in Superior Court of Los Angeles County.
The lawsuit alleges that NAR, along with Move Inc., Moving sales, OpCity Acquisitions, OpCity Inc. And REA Group GmbH. — all of which, according to the complaints, are wholly owned subsidiaries of Move and News Corpwho is also a defendant – defrauded brokers by selling them false leads. Move is the parent company of the property search portal Realtor.com.
The eight named plaintiffs are Agents James Bandy and Juan Carlos Carrera of Nevada, Agents Kamesha Sylvester Hamilton and Cliff Woodall of Florida, Bryan Casto, an agent from California, Michael Echternkamp, an agent from Washington state, Maria Hardy, an agent from New York, and Nidia Sanchez, an agent from Georgia.
Although NAR is a trade group and does not sell customer leads to agents, the plaintiffs allege that NAR “knowingly conspired with, aided, abetted, and participated in the charged conduct.” In addition, they allege that NAR was fully aware of the activities of its co-defendants.
According to the lawsuit, the defendants have a history of conducting their business in a “fraudulent, deceptive and unlawful manner and have received hundreds, if not thousands, of complaints and threats of litigation” from plaintiffs in similar situations for identical conduct.
The lawsuit also alleges that the defendants “continually failed and refused to adequately train, screen, conduct background checks, supervise, reprimand, direct and instruct” their senior management personnel in a “manner that meets or exceeds the standard of care” consistent with their policies and the laws of their respective home states.
In the complaint, the plaintiffs allege that the defendants failed to disclose that they used other websites and media to obtain the data, which they sold to agents as potential leads. The complaint does not question the manner in which the data was obtained and alleges that the defendants obtained the data lawfully and in compliance with data protection laws.
But according to the lawsuit, the plaintiffs were sold leads by combining data from known and unknown websites, including many consumers who had no interest in buying a home.
“These processes (‘unlawful bundling’) are aimed at amassing a massive (and rapidly growing) database, which the defendants then refer to as ‘leads,'” the lawsuit states.
The plaintiffs claim 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 lawsuit, the defendants “were (and continue to be) well aware that approximately half of these so-called ‘leads’ that the defendants bundled and sold to the plaintiffs were not ‘leads’ at all, but rather a number of individuals from whom the defendants had collected personal information but who had no interest in purchasing real estate,” the lawsuit states.
The plaintiffs allege that the defendants then went a step further by creating a “false tip system” in which they disseminated misleading information and exploited their connection to NAR to “fraudulently instill trust and confidence in” the misleading information.
The complaint states that the defendants accomplished this by employing a trained sales team and equipping them with “various scripts designed to disseminate the misleading information along with other false and fraudulent information in order to defraud, deceive and misrepresent the value and potential effectiveness of the defendants’ lead generation business.”
They also allege that the defendants required the plaintiffs to sign up for various lead generation products, but then changed the terms of the contract without notifying the plaintiffs.
Although the complaint acknowledges that NAR itself does not sell leads, the plaintiffs allege that NAR is complicit because it granted its co-defendants the authority to “use NAR’s name, logo, intellectual property, database and goodwill to market, promote and legitimize its co-defendants’ products and services.” They also allege that NAR relied on the co-defendants to increase its membership numbers through this licensing agreement.
The plaintiffs allege that the defendants’ scheme was “so widespread that it damaged the reputation of every potential class member and the entire real estate brokerage and agent business.”
The lawsuit seeks to create a class action lawsuit for all real estate agents in the United States who purchased leads, including so-called fake leads, from the defendants between August 23, 2020 and today. The plaintiffs are seeking damages and reimbursement of attorneys’ fees.
None of the defendants responded to a request for comment from HousingWire.
