Seattle-based Redfin Corporation will pay $4 million and change some of its policies to settle a discrimination lawsuit brought by Long Island Housing Services and several other organizations.
The lawsuit alleged that Redfin’s minimum home price policy violates the federal Fair Housing Act by discriminating against buyers and sellers of homes in communities of color and has a substantial adverse impact on those buyers and sellers based on race and national origin. The plaintiffs asserted that policies that limit or deny services for homes priced under certain values perpetuate racial segregation and contribute to the racial wealth gap, according to an LIHS statement.
The complaint further alleged that in zip codes with a higher proportion of non-white residents, Redfin offered no service at a disproportionately higher rate than in zip codes with lower proportions of non-white residents. This pattern was evident on Long Island and in other cities covered by the lawsuit, such as Baltimore; Chicago; Detroit; Kansas City; Louisville, Ky; Memphis, Tenn.; Milwaukee, Wisc.; Newark, N.J.; and Philadelphia.
As part of the settlement reached with Redfin, the company agreed to make changes that will stand for at least three years after an initial implementation period. The company also will implement an outreach and recruiting plan to increase racial diversity in its workforce, advertise its services to reach non-White consumers, and require its agents and local partner realty firms to attend fair housing training.
The settlement proceeds of $4 million will be used to monitor Redfin’s compliance with the agreement, invest in programs that expand homeownership opportunities on Long Island and in other cities covered by the lawsuit, and pay for litigation and investigation expenses.
“We hope that this settlement with Redfin marks the first step in breaking Long Island’s discriminatory patterns of segregation,” Ian Wilder, executive director of Long Island Housing Services, one of the plaintiff organizations behind the lawsuit, said in the statement. “We will hold corporations to the promise of technology to remove the stain of discrimination from housing, rather than add yet another hurdle for Long Islanders to surmount to escape our segregationist history.”
In the court action, Long Island Housing Services was joined by Fair Housing Justice Center; National Fair Housing Alliance; South Suburban Housing Center; HOPE Fair Housing Center; Fair Housing Center of Metropolitan Detroit; Lexington Fair Housing Council; Metropolitan Milwaukee Fair Housing Council; the Fair Housing Rights Center in Southeastern Pennsylvania; and Open Communities.
One of the giants in the residential brokerage industry, Redfin operates in 95 markets in the United States and Canada and has generated $195 billion in home sales. Redfin averaged nearly 47 million monthly users on its mobile apps and website in 2021, according to the statement.
Wilder said the settlement “removes what seemed to be Redfin’s electronic redlining maps, so that Long Islanders do not have an additional impediment in trying to escape segregation. LIHS and FHJC will continue to fight housing discrimination until segregation no longer stains the Long Island landscape.”
Redfin issued the following statement in regard to the lawsuit and settlement: “Redfin and NFHA both have long standing commitments to fair housing, and we’d rather spend money to advance fair housing rather than litigation. Our commitment to broadening the price range of the homes we can sell is why, every year, by design, we lose money selling low-priced homes. As part of the settlement, we will increase our investment in serving buyers interested in low-priced homes in communities that have historically been underserved by the real estate industry. Since we can’t afford to have our employees sell an unlimited number of homes at money-losing prices, Redfin will continue the general practice of using price to decide whether to serve a customer via a partner or an employee. Redfin hasn’t broken the law and we continue to stand behind our business practices. The settlement does not include an admission of liability. We recognize there is much to be done to make housing fair and to reverse decades of inequality and we will continue to do our part.”
The lawsuit was filed by the New York City-based law firm Emery Celli Brinckerhoff Abady Ward & Maazel, LLP, and Seattle-based firm MacDonald Hoague & Bayless in the federal district court in Seattle.
“Redfin has promoted itself as bringing racial justice to real estate through its cutting-edge technology,” FHJC Executive Director Elizabeth Grossman said in the statement. “But this lawsuit shows that companies cannot hide behind seemingly unbiased algorithms when their very business models perpetuate the harmful effects of historic redlining going back multiple generations.”