Zillow Group (ZG, Z) Securities Fraud Lawsuit Investigation

Shamis & Gentile P.A., a law firm that advocates for investors who are victims of securities fraud, is investigating potential claims against Zillow Group, Inc. (NASDAQ: ZG, Z)

If you purchased or held Zillow Group securities and suffered losses, you may be eligible to join this securities investigation and seek corporate reforms, the return of funds back to the company, and a court-approved incentive award at absolutely no cost to you.

About Zillow Group

Zillow Group operates an online real estate marketplace in the United States, offering platforms for buying, selling, renting, and financing residential properties. Its services include connecting consumers with real estate agents and listings, along with advertising and referral programs for professionals.

As of September 2025, the company reported a market capitalization of about $19.6 billion with both Class A and Class C shares publicly traded.

What's being investigated

In 2025, Zillow Group became the subject of multiple lawsuits and regulatory actions that challenge its business practices. The cases focus on agent referral fees, listing policies, copyright use, and competition agreements, raising questions about whether public statements matched internal conduct. For investors in both Class A (ZG) and Class C (Z) shares, these matters highlight potential governance weaknesses, compliance risks, and long-term impacts on market value.

1. FTC and Multistate Antitrust Suits (September 30, 2025)

On September 30, 2025, the Federal Trade Commission sued Zillow over a February 2025 agreement with Redfin, alleging that Zillow paid $100 million and secured terms that effectively removed Redfin as a competitor in multifamily rental advertising for up to nine years.

The FTC complaint points to provisions that transferred Redfin’s customers, restricted employee movement, and limited Redfin’s ability to reenter the market, comparing them to non-compete clauses. Regulators argue these terms reduce competition, raise advertising costs for property managers, and limit options for renters in a highly concentrated market.

The case underscores potential gaps in Zillow’s board oversight of antitrust risks and how public messaging about “more choice” aligns with actual competitive outcomes. For investors, the lawsuit introduces the possibility of structural remedies, including unwinding or revising the Redfin agreement, alongside compliance costs that could weigh on Zillow’s long-term strategy.

That same week, attorneys general from five states filed a parallel complaint, broadening the regulatory scrutiny. The joint state lawsuit was filed in the U.S. District Court for the Eastern District of Virginia.

The bi-partisan coalition of states suing Zillow include:

• Virginia
• Washington
• Arizona
• Connecticut
• New York

According to the complaint, the agreement resulted in Redfin shutting down its multifamily rental advertising business, transferring clients to Zillow, and exiting the market for up to nine years. State officials argue that this wholesale reduction in competition may drive up advertising costs and limit options for renters.

On this news, Zillow Group’s Class A (ZG) shares fell more than 4% on the news, with Class C (Z) shares declining in parallel.

2. Consumer Class Action Lawsuit Over Flex Program (September 19, 2025)

On September 19, 2025, a nationwide consumer lawsuit was filed in federal court, alleging that Zillow’s “Flex” referral program concealed referral fees of up to 40% of agent commissions. Plaintiffs allege that Zillow steered homebuyers toward agents who participated in Flex, while representing the program as consumer-friendly and transparent.

The complaint points to potential violations of the Real Estate Settlement Procedures Act (RESPA) and state consumer-protection laws.

When the lawsuit became public on September 22, 2025, Zillow’s Class A shares (ZG) nearly 6%, while its Class C shares (Z) mirrored the decline. Investors argue this raised concerns about whether Zillow’s public assurances of transparency potentially omitted material facts. The claims suggest possible governance failures, including inadequate oversight of consumer-protection risks and disclosure accuracy.

The timing of the Flex program makes these allegations especially concerning. Zillow launched Flex after the 2024 NAR settlement changed how buyer's agent commissions work, allegedly telling consumers and investors it would save them money and give them more choices. If the lawsuit's claims are true, the actual fees were much higher than Zillow suggested.

This could lead to government fines under laws that ban hidden kickbacks in real estate deals. It could also hurt Zillow's reputation with both agents and homebuyers. For shareholders, the risk goes beyond this one lawsuit; it threatens the referral business that Zillow increasingly relies on to make money.

3. CoStar Copyright Lawsuit (July 30, 2025)

On July 30, 2025, CoStar, owner of Homes.com, sued Zillow alleging widespread copyright infringement tied to tens of thousands of watermarked images. Public statements and coverage indicate the claim centers on Zillow displaying nearly 50,000 CoStar-owned photos (many with watermarks) across Zillow and partner sites, and allegedly doing so hundreds of thousands of times.

CoStar asserts damages exceeding $1 billion and frames the conduct as “rampant infringement” rather than isolated mistakes. For investors, the legal risk profile is twofold: statutory damages for willful infringement could be significant, and operational remedies could force rapid image takedowns or changes in ingestion/syndication pipelines.

The presence of watermarks on many of the disputed images raises potential questions about Zillow's content review processes and whether the company had adequate systems to prevent unauthorized use. CoStar argues that displaying watermarked photos shows Zillow knew or should have known the images were protected, which could support claims of willful infringement; a finding that would increase potential damages.

Following the filing, Zillow’s Class A (ZG) and Class C (Z) shares traded lower intraday on July 30, 2025, as investors allegedly weighed potential billion-dollar exposure and operational risks.

Beyond the immediate legal costs, a ruling against Zillow could damage relationships with other content providers and listing partners who supply photos for the platform. If those partners lose confidence in Zillow's ability to respect intellectual property rights, they may limit access to high-quality images, which could hurt the user experience and reduce traffic to Zillow's sites.

4. Compass Antitrust Lawsuit Over Listing Policies (June 23, 2025)

On June 23, 2025, Compass filed an antitrust suit alleging Zillow’s policies around “private” or “office” listings unlawfully restricted competition and harmed brokerages. According to the complaint, Zillow’s approach to how off-MLS listings appear (or don’t appear) on its platforms reduced consumer choice and disadvantaged rival brokerages in search visibility and lead generation.

The lawsuit contends these practices functioned as a “Zillow Ban” that limited how certain listings could be marketed, which Compass says impeded fair competition across key metropolitan markets.

Compass argues that Zillow's dominant position in online real estate search gives it outsized control over which properties consumers see and how brokerages compete for buyers. By restricting how off-MLS listings are displayed, Zillow allegedly forced brokerages to choose between using its platform on Zillow's terms or losing access to millions of potential buyers.

For investors, this lawsuit highlights potential risks tied to Zillow's market power. If courts find the listing policies anticompetitive, Zillow may face limits on how it manages its platform, potentially reducing its ability to control listing flows and monetize agent relationships. The case also raises governance concerns about whether Zillow's board properly assessed antitrust risks when setting policies that affect how competitors can reach consumers.

Key timeline

• February 11, 2025: Zillow announces Redfin partnership, describing it as delivering “more choices” for renters.
• April 10, 2025: Zillow announces consumer-first commitment to real estate transparency.
• June 23, 2025: Compass files an antitrust lawsuit against Zillow, alleging the so-called “Zillow Ban” on private listings is anticompetitive.
• July 11, 2025: Analysts question Flex program economics; Zillow reiterates that it provides value to consumers.
• July 17, 2025: Zillow submits a court filing in the Compass case, arguing it is not legally required to alter its listing standards.
• July 30, 2025: CoStar files a copyright infringement lawsuit alleging Zillow misused tens of thousands of protected images on its platforms.
• September 19, 2025: Consumer lawsuit filed in federal court alleging steering and hidden commission fees.
• September 22, 2025: Media coverage reports lawsuit; Class A shares fall 7%, Class C shares fall similarly.
• September 23, 2025: Zillow responds, reaffirming commitment to transparency and consumer choice.
• September 30, 2025: The FTC files an antitrust lawsuit claiming Zillow’s $100 million agreement with Redfin was designed to suppress competition in rental advertising; both ZG and Z decline in reaction.

Why investors may be concerned

Stockholders argue that Zillow may have failed to fully disclose material facts about its referral practices, partnerships, and competitive conduct. The lawsuits and regulatory actions highlight overlapping risks for both Class A (ZG) and Class C (Z) shareholders.

Potential risks incurred as a result of allegations and litigation:

• Alleged misleading statements and omissions (Consumer Lawsuit): Investors contend that Zillow’s public assurances of transparency and consumer benefit may not have disclosed material facts about referral fees and steering practices tied to its Flex program.
• Board and management oversight (FTC Lawsuit): The FTC’s case alleging a $100 million payment to Redfin to suppress competition raises questions about whether Zillow’s board adequately monitored compliance with antitrust laws.
• Internal controls (Compass and CoStar Lawsuits): Allegations of anticompetitive listing policies (Compass) and copyright misuse in real estate images (CoStar) suggest Zillow’s internal controls may not have identified or mitigated legal and compliance risks.
• Exposure to litigation risk (All Four Lawsuits): With simultaneous challenges in consumer protection, antitrust, and intellectual property, Zillow faces the possibility of fines, settlements, or mandated changes that could affect profitability.
• Reputational and financial harm (All Four Lawsuits): Ongoing disputes over hidden fees, competitive practices, and partnerships may damage Zillow’s brand and weaken agent relationships, while share price declines in both ZG and Z stocks illustrate potential long-term shareholder impact.

Your Rights and Next Steps

This is an active investigation into potential breaches of fiduciary duty and governance at Zillow Group, Inc. Shareholders who owned Zillow stock during the events at issue in 2025 and continue to hold today may have important rights.

In a derivative action, shareholders act on behalf of the company to hold directors and officers accountable for alleged misconduct. Any monetary recovery or governance reforms obtained through such actions benefit Zillow as a whole, not individual shareholders directly.

It is important to act promptly, as shareholder rights investigations are time-sensitive. Preserving trading history, records, and relevant communications can be critical for evaluating potential claims.

How Protect Your Rights & Seek Reform at Zillow

If you purchased Zillow Group, Inc. (NASDAQ: ZG, Z) shares in 2025 and still hold some today, you can seek corporate reforms, the return of funds back to the company, and a court-approved incentive award at absolutely no cost to you. Securities investigations are time-sensitive, and your ability to participate may depend on when you act.

To join the investigation and help protect your rights, complete the form below.