SNAP NHD SUED IN FEDERAL COURT FOR UNLAWFUL BUSINESS PRACTICES, INCLUDING PROVIDING ILLEGAL KICKBACKS TO BROKERS
A lawsuit was filed on December 30, 2020, against SNAP NHD, LLC and its CEO, Will Caldwell, in the United States District Court, Central District of California (Case No. 2:20-cv-11792) alleging, among other things, that SNAP has engaged in unlawful and unfair business practices against its competitor Digi-Fama, LLC.
Of particular note to California real estate brokers:
First, it is alleged that SNAP improperly conducts business on behalf of “private-label” clients and that its practice violates RESPA. The Complaint alleges that the “private-label” clients involved in this illegal practice include brokers located in “Rancho Cucamonga, CA, Lincolnshire, IL, and two in Fresno, CA.” The Complaint alleges that this is a “non-exhaustive list.”
Second, it is alleged that “SNAP pays an illegal kickback to various California real estate brokers, real estate agents, and escrow agents who place NHD report orders with SNAP, which violates Cal. Bus. & Prof. Code § 17405 and RESPA” and that the brokers involved in these kickback arrangements include “companies located in at least Corona, Sevan [sic] Gables, Windermere, and Mission Viejo.”
And that’s not all that is alleged against SNAP.
Digi-Fama also alleges that SNAP made false representations about the amount of Digi-Fama’s E&O insurance in order to induce a particular broker to use SNAP for its “private-label” business. Digi-Fama further claims that one of SNAP’s business practices is to pay an insurance company “illicit incentives from SNAP to direct brokers and escrow companies to use SNAP’s services instead of other NHD data and service providers.” SNAP is further alleged to have violated federal copyright law.
The claims against SNAP are for (1) Tortious Interference with Existing & Prospective Economic Advantage; (2) Trade Libel/Product Disparagement; (3) Unfair Practices Act – Bus. & Prof. Code § 17000 et seq.; (4) Section 17200 Unfair Competition; and (5) Declaration of Copyright Invalidity, Unenforceability, and Non-Infringement.
SNAP tried to have Digi-Fama’s lawsuit dismissed, but SNAP was unsuccessful. The court did, however, dismiss the non-copyright claims on the ground that those claims should be filed in state court, not federal court.
Will the CFPB be interested in SNAP’s alleged RESPA violations?
Will the regulators go after the brokers involved with SNAP?
It doesn’t take much to figure out who those brokers are, does it?