Spat Ramps Up as Zillow Challenges CoStar's Advertising Claims

Zillow has challenged a raft of advertising claims made by CoStar in an apparent escalation of the rivalry between the two in the U.S. residential real estate market.

The dispute is centred around claims CoStar made about its rentals offering that appeared on company videos and direct mail marketing to prospective landlord clients.

Zillow challenged CoStar's claims via the National Advertising Division (NAD) of the Better Business Bureau. Although the body doesn't have official legal jurisdiction, it is essentially a way for U.S. companies to self regulate and resolve advertising disputes without costly and lengthy legal battles.

In terms of the outcome of the NAD's decision on CoStar's advertising claims, Zillow did succeed to some extent in its bid to limit its rival's claims with a press release from the NAD saying that:

• CoStar has a reasonable basis for its claims that "Apartments.com has successfully helped get over 40 million leases signed by happy renters nationwide" and that Apartments.com helps landlords "[k]eep [their] property leased at a great ROI,"
• CoStar agreed to permanently discontinue the claim "We deliver the highest quality, ready-to-move renters,"
• The claim to be the "Most Popular Place to Find a Place" must be modified to obviously be limited to rentals
• Claims around popularity must not be based solely on unique visitors but also on conversions
• CoStar's claim to be the #1 listing network must be accompanied by a statement qualifying it as being based on listings volumes
• CoStar's claims around conversions are only supported by a subset of property owners and should all be discontinued
• Claims that listing with CoStar gives 7x more exposure (because it has 7x more websites than Zillow) should be discontinued as they may be misleading

Since announcing its move into the residential market back in 2020, CoStar has based a good deal of its Zillow-bashing on its west coast rival's practice of allowing third-party agents to receive leads on properties for which they are not the listing agent. One of the most incendiary claims made by CoStar, "Unlike other websites, we never sell or share your leads", makes reference to this practice and according to the NAD's ruling, should have the comparative element removed from it.

In a statement, CoStar said that the company was "pleased" with what it described as the "favorable findings" but also said that it would appeal the decision "specifically with respect to its conclusions that CoStar's advertising is not necessarily directed at the rental market and that CoStar's claims regarding the popularity of Apartments.com is not supported by unequivocal website traffic data regarding unique visitors to the site".

This latest spat between Zillow and CoStar is far from the first of its kind in the lucrative real estate portal industry. Back in 2017, a year-long feud between REA Group and Domain in Australia ended in Federal Court after REA Group accused its bitter rival of misleading advertising around its claims to have the country's most popular real estate app. In that case, Domain eventually got away with 5 of the 7 disputed claims including the hotly contested 'Australia's #1 Property App' claim.