On July 27, the U.S. District Court for the Western District of Washington dismissed a consolidated putative class action complaint alleging that an online real estate platform violated RESPA, the Racketeer Influenced and Corrupt Organizations Act (RICO), and the Washington Consumer Protection Act (WCPA). The plaintiffs alleged that the platform conspired with agents participating in its referral program to steer buyers to agents who pay a 40 percent referral fee for preferred lead placement and to the platform’s affiliated mortgage lender, which allegedly offered uncompetitive terms.

The court dismissed RESPA claims under 12 U.S.C. § 2607(a) and (b), finding that the plaintiffs lacked statutory standing because they did not allege that they personally paid for the contested settlement services. Instead, the complaint acknowledged that the disputed fees were paid by seller brokers. The court also dismissed RICO claims for failure to satisfy Rule 9(b)’s heightened pleading standard, finding that the plaintiffs relied on conclusory allegations of mail and wire fraud consistent with ordinary business activities rather than identifying specific fraudulent acts. The court further found that the plaintiffs failed to plausibly allege a RICO enterprise, a pattern of racketeering activity, or proximately caused harm.

In addition, the court dismissed the WCPA claims, finding that the platform’s terms of use, touring agreement, and affiliated business arrangement disclosure explicitly disclosed its referral-for-fee structure, and that the plaintiffs failed to identify conduct likely to mislead a reasonable consumer. The court also dismissed the unjust enrichment, breach of fiduciary duty, aiding and abetting claims, and held that several plaintiffs’ claims were time-barred. The court nevertheless granted the plaintiffs leave to amend, stating that it could not conclude at this stage that the pleading deficiencies were incurable.

The plaintiffs subsequently filed a consolidated third amended class action complaint on August 17, narrowing the claims to focus primarily on RESPA § 2607(a) and the WCPA, adding new plaintiffs, and alleging for the first time that each plaintiff directly paid loan origination fees and mortgage points to the platform’s affiliated lender for settlement services.