Seattle-based real estate tech company Redfin Corp. (Nasdaq: RDFN) will pay $4 million as part of a settlement in a fair housing lawsuit filed in 2020.
The lawsuit, filed by the National Fair Housing Alliance and other fair housing organizations, alleged that Redfin's practice of setting a minimum price threshold for its services negatively impacts nonwhite communities. Although Redfin will continue to use the minimum price threshold for its employee agents, it will no longer set a minimum price in referring consumers to its partners.
“Our goal was to ensure that all neighborhoods are treated fairly and have access to the full range of services provided by any real estate company,” Lisa Rice, president and CEO of the NFHA, said in a news release. “We must also ensure that companies do not use their technologies, including digitally-based platforms, to deny people the housing opportunities and services they deserve. The steps Redfin has agreed to take are a positive move toward stamping out some of the nation’s most harmful practices, like redlining and appraisal bias.”
According to the NFHA and the other plaintiffs, Redfin's minimum price threshold resulted in the company not offering services in nonwhite ZIP codes at a higher rate than white ZIP codes in 10 markets. The NFHA added that the policy "can perpetuate racial segregation and contribute to the racial wealth gap."
At the time the lawsuit was filed, Redfin CEO Glenn Kelman wrote a letter to employees, posted on the company's website, that said Redfin hadn't broken the law. He added that the minimum price threshold is meant to ensure the company can pay employees a living wage with benefits.
"Even though the suit is wrong about the law, the issues it raises are important to Redfin, to our society and to me," Kelman wrote. "We have a long history of expanding into lower-priced communities; we want to expand faster."
As part of the settlement, Redfin will also implement a monitoring system to catch disparities in the minimum price threshold between white and nonwhite communities within the same market. Redfin has one year to implement the system. The company has also agreed to an outreach program to increase the diversity of its agents and partners.
In a statement to the Business Journal, Redfin wrote:
"Redfin and NFHA both have longstanding 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."
