OJO Labs Possible Antitrust Violations

OJO Labs Possible Antitrust Violations

A copy of the request filed with the DOJ and the FTC asking to review practices of OJO Labs brokerage.

Copy of author’s official request that asks the United States Federal Trade Commission and the United States Department of Justice to investigate OJO Home LLC brokerage on the grounds of an alleged violation of the Federal Trade Commission Act of 1914, an alleged violation of the Sherman Antitrust Act of 1890, as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with possible consumer allocation, unlawful kickbacks, and market allocation practices.

Attn: Citizen Complaint Center, Antitrust Division
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530
Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. NW Room CC-5422
Washington, DC 20580

Please find the information below with regards to possible antitrust violations.

What companies or organizations are engaging in conduct you believe violates the antitrust laws?

OJO Home LLC 1007 S Congress, Building 9, Suite 400
Austin, TX 78704
(512) 456-8292
Licensed as:
Alabama Real Estate Commission Company License (000126252-0)
Alaska Real Estate Broker License (121127)
Arizona Real Estate Limited Liability Brokers License (LC686429000)
Arkansas Real Estate Broker License (Resp. Broker License PB00086909)
California Corporate Real Estate Broker License (02098814). Known in California as OJO Home California, Inc.
Colorado Real Estate Company – Employing (EC.100083279)
Connecticut Real Estate Broker (REB.0792627), Known in Connecticut as OJO Home Connecticut LLC
District of Columbia Real Estate Organization License (REO200200558)
Florida Real Estate Corporation License (CQ1058741)
Georgia Real Estate Commission Limited Liability Company License (77388)
Hawaii Real Estate Broker Entity (RB 23005)
Idaho Company Broker License (LC49582)
Illinois Licensed Real Estate Limited Liability Firm (481.013126)
Indiana Real Estate Broker Company License (RC51900131)
Iowa Real Estate Firm License (F06084000)
Kansas Real Estate Company License (CO00002970)
Kentucky Real Estate Commission Registered Firm Branch (251528)
Louisiana Broker Corporation License (BROK.0995702128-CORP)
Maine Limited Liability Company License (AL90603285)
Massachusetts Real Estate Business License (423245)
Michigan Real Estate Broker License (6505422481)
Minnesota Real Estate Company License (40641277)
Mississippi Real Estate Commission Broker License (N/A)
Missouri Real Estate Association License (2019024905)
Montana Broker License (RRE-BRO-LIC-38984)
Nebraska Employing Broker License (20150467)
New Hampshire Real Estate Firm License (074889)
New Jersey Real Estate Company License (1971123)
New Mexico Real Estate Commission Business License (09706)
New York Principal Office License (10991230857)
North Carolina Firm License (C31205)
North Dakota Corporate Real Estate License (3278)
Oklahoma Broker Association License 182005
Oregon Real Estate Agency Registered Business Name License (201232920)
Pennsylvania Real Estate Commission Broker Standard License (RB069015)
South Carolina Real Estate Office License (23597)
South Dakota Real Estate Firm License (15111)
Tennessee Real Estate Firm License (264473)
Texas Real Estate Commission Real Estate LLC License (9008342)
Texas Real Estate Commission Corporate Broker License (9007689)
Utah Real Estate Division Real Estate Company License (11445350-CN00)
Vermont Real Estate Brokerage Firm License (083.0650376-MAIN)
Virginia Real Estate Board Real Estate Firm License (0226031047)
Washington Real Estate Firm License (21174)
West Virginia Real Estate Broker License (005348)
Wisconsin Real Estate Business Entity License (938451-91)
Wyoming Real Estate Corporation, Partnership or Limited Liability Company License (232100)

Further, an unknown number of licensed Partner Agents who choose to execute blanket broker-to-broker referral agreements in alleged collusion with OJO Home LLC brokerage.

Why do you believe this conduct may have harmed competition in violation of the antitrust laws?

OJO Labs operates under a variety of broker licenses, mainly two issued by the Texas Real Estate Commission as OJO Labs Inc. 9007689 and OJO Home LLC 9008342, but it does not produce any services that are typically offered by real estate agents and does not represent consumers when buying or selling real estate in any state. In exchange for matching consumers with a Partner Agent, OJO Labs is compensated by the Partner Agent with an undisclosed percentage of their commission, agreed in advance.

For consumers, OJO Labs promises real estate assistance, supposedly being able to learn a buyer’s preferences via machine learning and match them with homes that fit their needs. By gathering consumers’ home preferences and budgets, OJO communicates conversationally through mobile text as a personal advisor throughout the home-buying process.

For real estate professionals, OJO Labs promises a scalable, high-touch experience that reflects well on a brokerage and helps increase closings by scrubbing leads as they come in and nurturing buyers with unique insights powered by machine learning. Once a homebuyer is prepared, OJO Labs concierge initiates a live transfer to the Partner Agent. OJO representatives give Partner Agents all the background information on the homebuyer to make the transition as warm as possible. OJO claims to help real estate professionals to create stronger, better-informed connections with buyers and sellers and keeps them engaged until they’re ready to get down to business.

In reality, OJO Labs is a broker-to-broker collusion scheme that scrubs consumer’s information and passes it along to a colluding broker who is willing to pay for it with a cut of their commission. All Partner Agents agree to pay OJO Labs a pre-arranged referral fee, on all closed transactions, through their employing broker. A referral agreement between OJO Labs and a Partner Agent for a random transaction that may or may not happen sometime in the future is executed in advance.

OJO Labs engages in consumer and market allocation schemes with partner Agents brokerages, because it is a broker itself. Instead of representing consumers to help buy and sell homes, the company actively disengages from its licensed activities so that every Partner Agent knows that OJO brokerage will not compete with them.

RESPA (12 U.S.C. 2607) Section 8 narrowly allows payments under cooperative brokerage and referral arrangements between real estate agents and real estate brokers. This limited exemption on kickbacks only applies to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity.

OJO Labs does not act in a real estate brokerage capacity, instead, their real estate license is used to collect a blanket referral fee from the largest number of brokers possible. Sherman Act effectively requires all active real estate brokers to proactively compete for consumers. An agreement or an understanding between brokers not to compete for a mutual profit is a "per se" violation of antitrust regulations in the United States.

The amount of a referral fee between brokers must be negotiated with respect to an individual transaction. It is a per se violation of the Sherman Act for real estate brokers to agree on a “standard” referral fee that will be paid for producing a client. Real estate professionals are not allowed to enter into “standard” referral agreements because such agreements always restrict free trade.

To comply in good faith with RESPA (12 U.S.C. 2607) Section 8 exception for cooperative brokerage and referral arrangements, real estate agents must render referral agreements in a particular instance for a particular transaction.

OJO Labs owes absolutely no duty of care to consumers and takes no responsibility for the transaction, despite receiving a direct financial benefit from the home sale or purchase completed by a referred brokerage.

"When you accept a referral to one of our Referral Partners, you acknowledge that you are purchasing any products or services offered by the Referral Partner directly from them and that OJO is not a party to any agreement between you and the Referral Partner with respect to those products and services; and OJO is not responsible for that Referral Partner’s products or services, the content therein, or any claims that you or any other party may have relating to that Referral Partner’s products and services." Source: OJO Labs Terms of Service.
"We do not endorse or recommend the products or services of any service provider and are not an agent or advisor to you or any service provider. We do not validate or investigate the licensing, certification or other requirements and qualifications of service providers. It is your responsibility to investigate any service providers before you engage them. You acknowledge and agree that these service providers are solely responsible for any services that they may provide to you and that we are not liable for any losses, costs, damages or claims in connection with, arising from, or related to, your use of a service provider’s products or services." Source: OJO Labs Terms of Service.

OJO Labs typically captures consumers via traditional advertisement channels such as TV ads, Internet search ads, etc. For the benefit to place a hidden rake on a mass volume of transactions, OJO Labs heavily advertises their service. For OJO Labs, an online ad on Google worth a few dollars is easily converted into thousands or tens of thousands in blanket referral fees. Without a need to pay for costs of producing an actual service of a brokerage to consumers, the OJO Labs collusion scheme is incredibly profitable.

Actions of OJO Labs directly increase the costs of owning homes in the United States due to added referral fees, consumer allocation practices, and reverse completion between brokers. Partner Agents in the scheme have no incentive to compete for consumers with lower fees, instead, they have an incentive to compete for OJO Labs’ attention. In this scheme, both colluding parties benefit from offering consumers higher commissions. OJO Labs promotes Partner Agents as “superior” to those outside of the network, thus limiting free-market competitive forces and steering consumers in self-interest.

OJO Labs rakes in hidden junk fees while consumers are fighting their way through a housing affordability crisis.

As long as referring schemes, such as OJO Labs, are allowed to operate, brokers looking to represent consumers are naturally encouraged to participate in the scheme. “There are no upfront costs, only pay us once the transaction closes,” is an attractive proposition to a broker who acts on this proposition by simply increasing a quoted commission to any consumer who comes as a referral. Any broker who chooses not to participate in such schemes risks losing “free business.” Such an environment is highly poisonous to a healthy real estate representation market.

OJO Labs' referral-only collusion scheme secretly harms real estate consumers and diminishes efforts of competitive independent agents to provide a tangible service at an independently set competitive price.

As a matter of fair real estate transactions across the United States, there is no excuse to maintain these blanket broker-to-broker collusion schemes established by a handful of “paper” brokers, such as OJO Labs.

The government must treat OJO Labs as a broker because it is paid as a broker and is licensed as a broker. OJO Labs is not a technology company, as it claims since technology companies do not cut into the fees associated with buying and selling real estate. A legitimate technology company, such as Yelp, can easily advertise brokers’ services to consumers, but licensed brokers are not allowed to promote services of competitors for profit. A broker must promote their individual services directly to consumers and exist to actually help consumers buy, rent, and sell real estate.

All real estate brokers must compete with one another; there is no exception. In the event brokers organize their operations into referral networks, this basic rule of free competition fails – a broker who organizes the scheme, in one way or another, refuses to compete with participants of the scheme.

What is your role in the situation? For instance, are you a user, customer, competitor or supplier?

I currently serve as a CEO HomeOpenly. HomeOpenly is an Open Real Estate Marketplace™ designed and built to improve the homeownership experience in the United States.

HomeOpenly is a technology company that designs, builds, and maintains a series of online marketplace solutions with a focus on a home search, automated valuation modeling (AVM), home buyer's and seller's representation services, mortgage origination, refinance, home insurance, renovation, design, staging, home inspections, home security, moving, home maintenance, title, escrow, cash offer stand-in programs, home warranty, and other real estate products and services.

HomeOpenly operates subject to a 0% rake as our primary competitive advantage to establish a competitive fee schedule for service providers with the use of network effects. HomeOpenly is not a broker and all service providers on our network compete for consumers individually. Our efforts are actively hampered by anticompetitive practices of OJO Labs brokerage.

Successful implementation of an Open Marketplace™ platform in the real estate industry requires full enforcement of existing antitrust laws that are enacted to protect US consumers.

As long as brokers can trade consumers as “leads” between independent service providers in exchange for blanket referral fees, Open Marketplace™ continues to operate at a competitive disadvantage.

If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice

Related to: antitrust, real estate, OJO Labs, consumer brokering, consumer allocation, market allocation, referral fees

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Last updated: June 28, 2020
First published: June 28, 2020