Ideal Agent Price Fixing and Antitrust

A request to review practices of Lead & Prosper, LLC (DBA IdealAgent.com and Ideal Agent) on the subject of consumer allocation practices, price-fixing, and reverse completion on file with the DOJ, CFPB, and the FTC.

A copy of the author’s official request that asks the United States Federal Trade Commission, the United States Department of Justice, and the United States Consumer Financial Protection Bureau to investigate Lead & Prosper, LLC (DBA IdealAgent, Ideal Agent, IdealAgent.com) and IdealAgent Partner Agents on the grounds of an alleged violation of the Federal Trade Commission Act of 1914 (15 U.S.C. Section 45) an alleged violation of the Sherman Antitrust Act of 1890 (15 U.S.C. Section 1) alleged violation of RESPA Section 8 (12 U.S.C. 2607) as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with alleged broker-to-broker market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing 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

Attn: CFPB Regulatory Implementation
Consumer Financial Protection Bureau
1700 G St., NW
Washington, DC 20552

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?

Lead & Prosper, LLC (DBA IdealAgent, IdealAgent.com, Ideal Agent, IDEAL AGENT)
3109 Dr. Martin Luther King Jr Blvd., Suite 650
Tampa, FL 33607
Phone: (800) 750-4014
Florida Real Estate License CQ1053626

In an alleged open collusion scheme with a vast partner network of IdealAgent Partner Agents who operate under competing brokerages and choose to execute blanket broker-to-broker referral agreements with Lead & Prosper, LLC. in an ongoing effort to restrain free trade in the US residential real estate representation sector.

Colluding Partner Agents are independent Realtors firmly affiliated with various brokerages such as Berkshire Hathaway HomeServices, eXp Realty, Windermere Real Estate, Keller Williams Realty, Inc., RE/MAX, Coldwell Banker, NextHome, Inc., HomeSmart, Compass, John L. Scott Real Estate, CENTURY 21, Realty ONE Group, Vylla, ERA Real Estate, Weichert Realtors, Better Homes and Gardens Real Estate, Fathom Realty, Intero Real Estate Services, John R. Wood Properties, Worth Clark Realty, Sotheby's International Realty, etc.

Consumer Allocation between Licensed Real Estate Brokers

Lead & Prosper, LLC is a licensed broker that operates in Florida under a License CQ1053626 and 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. This is a sham brokerage that operates a nationwide website registered under a domain https://www.idealagent.com/

For consumers, IdealAgent claims that: "Our agents will list for 2% and offer the typical Buyer's Agent commission in your market ranging from 2% to 3%. The average Buyer's Agent commission nationwide is 2.5%. If a buyer calls on your house directly without an agent, our agents have agreed to do the entire transaction for only 2% total. Homes under $150,000 will have a minimum list side commission of $3,000." These statements are entirely false. IdealAgent is not a marketplace for real estate brokers, instead, IdealAgent is a licensed brokerage. IdealAgent brokerage refuses to compete with other brokers in an elaborate online scheme that organizes competitors into a collusion network via false savings distributed consumers on the demand side, and "blanket" referral agreements on the supply side.

In exchange for matching consumers with a Partner Agent, IdealAgent is compensated by the Partner Agent with a blanket 25% of their commission, agreed in advance.

According to the company, brokers can join the partner network "without paying any upfront costs. Only pay for successful leads."

A blanket referral fee paid by the Partner Agents directly increases the cost of buying or selling a home for consumers. Once IdealAgent refers a customer to a Partner Agent, that agent, not IdealAgent, represents the customer from the initial meeting through closing, at which point the agent pays IdealAgent a portion of her commission as a referral fee. The final price and quality of such transactions are substantially worse.

IdealAgent is an open collusion arrangement between competitors that leads to an inefficiency known as "reverse competition" where referring brokers end up competing not for the consumer attention but for the attention of the middle-man who steers the consumer toward its network of brokers and away from competitors.

IdealAgent, effectively, orchestrates a hub-and-spoke conspiracy in which a firm (IdealAgent acts as the hub) organizes collusion among competitors via horizontal consumer allocation agreements. A hub and spoke conspiracy is correctly characterized as an agreement to eliminate competition among the spokes, wherein in this case, all Partner Agents benefit from knowing that IdealAgent will not allow them to compete severely with each other since this would directly negatively affect the aggregate referral fees received by IdealAgent.

IdealAgent, in effect, offers consumers some savings, but not as a competitive mechanism, but rather a product of price-fixed collusion. IdealAgent chooses the participants in the scheme, it unilaterally distributes leads from consumers in the interest of preserving the collusion, for which all brokers in the scheme pay with a cut of their earned commissions.

The horizontal blanket referral agreement among the brokers is the central element of the scheme. Each broker, in effect, knows that every other broker in the scheme is tied into the kickback, thus no one broker is offering truly competitive rates. IdealAgent sets arbitrary blanket rates for brokers in an effort to earn massive kickbacks form a large number of transactions across the United States.

Such pay-to-play steering results in lower quality of service, higher commissions, false savings, and uncompetitive set fixed prices. In effect, IdealAgent turns consumers into a commodity for sale to a large number of competing brokerages.

Both, IdealAgent and competing IdealAgent Partner Agents benefit from the consumer allocation scheme where both parties choose to openly collude, rather than compete with one another. Every Partner Agent in the scheme agrees to price fixed rates and the consumer allocation for commission kickbacks, just as much as IdealAgent does.

Ideal Agent CEO, Steve Johnston, claims that: "We match with the top 1 percent agents across the country. They can be from any brokerage, Keller Williams, RE/MAX, Compass. They have agreed to do business with us because we send them a lot of business. Their sign goes in the yard. Since they are top agents, they are charging 6 percent or more to their normal clients and they are listing our clients at 2 percent. None of the other agents know that our clients are getting a discount, so we fit into their inventory, which gets our clients great results. They’ll sell homes faster, they’ll sell for more money and the best part is they get it at a lower commission."

Above paragraph describes a textbook consumer allocation and a hardcore price fixing scheme between licensed brokers. Ideal Agent refuses to represent consumers, farms out consumers to competitors and further sets prices for them in order to attract consumers into the scheme. What they fail to mention is that every broker in this scheme agrees to pay a blanket kickback from every transaction and refuses to compete for consumers in the open market. In effect, all brokers in this hub-and-spoke collusion scheme are willing price fix their services with a competitor, but (possibly) unwilling to offer these savings on the open market. Such collusion scheme is a major deterrent to free and open competition.

Partner Agents are independent licensed agents affiliated with other brokerages, and IdealAgent does not have any control over their actions. This scaled arrangement with third parties exists based on allocation between competitors that not only leads to consumer confusion but also adversely affects the final price of commissions. A referral agreement between IdealAgent and a Partner Agent for a random transaction that may or may not happen sometime in the future is executed in advance designed to restrain free trade. The brokerage network itself is a selling point to consumers underpinned by the false savings, where most consumers do not realize that false savings are fabricated and priced to serve the scheme, rather than consumers.

According to their website, IdealAgent brokerage advertises their price fixing scheme in a blanket price-fixing collusion with some of the most prominent brokerages across all fifity states and Washington DC, including: Keller Williams, Weichert, Christie's, RE/MAX, ERA, Compass, Coldwell Banker, Better Homes & Gardens, Berkshire Hathaway, eXp Realty, Exit, Fathom, Sotheby's, Century 21, HomeSmart, and their agents.

Instead of representing consumers to help buy and sell homes, IdealAgent actively disengages from its licensed activities so that every IdealAgent Partner Agent knows that IdealAgent brokerage will not actively compete with them on any transactions.

IdealAgent owes absolutely no duty of care to consumers and takes no responsibility for the transaction facilitated by Partner Agents, despite receiving a direct financial benefit from the home sale or purchase completed by a referred brokerage. All consumers who use the scheme end up hiring two brokers for the work of one.

Price Fixing between Licensed Real Estate Brokers

As part of the consumer allocation agreements between IdealAgent and IdealAgent Partner Agents, these parties further engage in hardcore price-fixing of services.

A typical Ideal Agent advertisement on Google reads as following: "Find Top 1% Real Estate Agents In Your Area. Save Thousands With Commissions As Low As 2%. We Connect Home Sellers With Top Local Agents. 100% Free Service. Commissions As Low As 2% Sell Your Home Fast. Lowest Realtor Commission." This advertisement is entirely false. Ideal Agent brokerage does not produce a tangible service of a broker, it does not offer commissions for self-performed services, it does not offer any savings, it is not a free service. Instead, IdealAgent price fixes commission rates of a wide range of competitors for profit from Florida across all states' borders.

In reality, consumers always overpay for commissions due to the hidden kickbacks and price-fixed collusion between IdealAgent and IdealAgent Partner Agents. Consumers are further steered in a pay-to-play scheme toward unethical set of brokers, away from honest agents.

While IdealAgent is perfectly free to set rates for services within their firm, price-fixing rates with competitors is a "per se" uncompetitive practice.

Saving consumers from having to pay excessive brokerage fees can never be justified with price-fixing, especially in exchange for a financial gain between brokers. The blanket referral fee received by IdealAgent for setting up these price-fixing terms is the only reason the collusion scheme functions. IdealAgent has no interest in saving consumers on fees, it is only interested in earning the largest kickbacks possible from the largest number of home sale transactions as part of orchestrating the scheme. In effect, by controlling the prices offered to consumers, IdealAgent is able to find “a middle ground” that accommodates the colluding broker, the kickback, and offers just enough savings to consumers to engage with the scheme.

Section 1 of the Sherman Act states: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce … is declared to be illegal." This means that (1) there must at least two parties agreeing to take action, and (2) the agreed-upon action must restrain free trade. Price fixing and consumer/market allocation agreements are "per se" violations of the Sherman Act because these practices are inherently harmful to consumers; in other words, no defense or justification is allowed.

The free commerce belligerents in this hardcore price-fixing scheme are IdealAgent and any broker they refer a consumer to subject to these terms. These two independent parties are carrying out a common course of action by setting fixed commissions with the use of blanket referral agreements for mutual financial gain.

IdealAgent systematically steers consumers toward Partner Agents and away from highly competitive agents that operate outside the network. Agents must never agree on commission rates or rebate amounts with any outside party. Agents must take care to avoid even the implication that they have discussed or reached an agreement about their service fees, service offerings, and rates due to any outside influence with another broker.

Commission listing rates and buyer rebates should never be fixed through collusion. All commissions and rebates must be set by each real estate agent individually and may only be negotiable between the consumer and the real estate agent.

Further, it is a per se violation of antitrust laws for brokers to set "standard" referral fees that will be paid to other brokers. Real estate agents (only when they act in full brokerage capacity) may discuss or negotiate the referral fees concerning an individual transaction, but real estate professionals are not allowed to enter into a "uniform" or a "blanket" agreement on how a commission will be split, or a "standard" referral fee paid. The reason for this is exactly the premise behind the IdealAgent business model where brokers work to steer consumers toward other brokers in exchange for a pre-arranged referral fees, instead of offering a service.

Quality and honest real estate professionals establish pricing for their services independently, offer a tangible service, and without any kickbacks. Every single agent is different, and every single agent has an individual commission structure. The "blanket" terms set by IdealAgent quickly fall apart on a wide range of transactions, in rural or urban areas, agent experience, local competitive forces, and consumer awareness for savings. "Blanket" terms make the entire scheme easier to sell, but they do not deliver any value. In fact, according to the Department of Justice, the mere presence of "identical prices may indicate a price-fixing conspiracy."

When IdealAgent colludes with Partner Agents in self-interest, it offers homebuyers and home sellers false savings in a form of a "dangling carrot in front of the nose" to attract them toward the scheme, rather than to deliver genuine savings. The hidden fees between these brokers make it impossible for Partner Agents to offer consumers true market-rate savings. Brokers who pay blanket commission as kickbacks are unable and unwilling to offer competitive rates to consumers in this scheme, making all price fixed commissions artificially inflated. There is never an open market condition that justifies hiring two brokers for the work performed by one.

On the other hand, for IdealAgent brokerage to expand to a new area takes a mere blanket referral agreement with a random broker and a new ads coverage area on Google Ads. Legitimate agents who offer genuine savings to entice consumers are harmed as a result of fake collusion-derived savings offered by the IdealAgent scheme.

True competitive agents work hard to deliver and promote genuine savings for the best service, hire new agents and support staff, expand into new territories, open new offices, etc. IdealAgent, on the other hand, promotes hidden kickbacks disguised as savings over the same medium - the Internet. Google does not care who pays them for ads, as long as their advertising fees are paid in full. Real estate remains one of the largest revenue pools for Google and Facebook, where broker collusion schemes are much more profitable to advertise and to expand nationally vs. an actual service of a broker.

IdealAgent return on ads is 125x more than that of a competitive local agent who promotes savings because IdealAgent promotes kickbacks from inflated commissions without any hard costs of operations.

Consumers can receive much greater buyer refunds and overall listing terms on the open market, but they are consistently bombarded with IdealAgent ads that heavily advertise their scheme to consumers offering "100% free service." Of course, no broker works for free. IdealAgent exigent fees are simply hidden with Partner Agent’s inflated commissions.

In effect, IdealAgent collects tens of millions of USD annually in hidden kickbacks, claims to offer false savings, and steers consumers toward an unethical set of brokers involved in this scheme, with the use of Google Ads. On the other hand, consumers are faced with the impossible costs of buying homes while honest highly competitive agents who offer genuine savings are left high and dry due to the combined effects of "hardcore" antitrust violations.

Broker Collusion Harms Consumers and Open Markets

To entice consumers into the referral scheme, IdealAgent often advertises itself as a competitive online marketplace that "pre-negotiates" rates with brokers. This is false. IdealAgent price fixes rates with competing brokers, which is the opposite of negotiations.

Online marketplaces are digital media products that offer consumers the widest possible choices of service providers without any ulterior incentives. For example, a well-known online service Yelp! is an online marketplace where consumers can find a wide variety of services in the open online interface, can make informed decisions and can leave feedback for fellow consumers’ benefits.

Yelp! does not steer consumers toward any one service provider, it does not hide providers, it does not enter info anticompetitive agreements with any providers. Almost every real estate agent in the United States has a Yelp! profile and Yelp! does not cut into their commissions. Yelp! is not a real estate broker. Yelp! sells optional ads as any other legitimate media service.

On the other hand, IdealAgent deliberately steers consumers toward brokers who have signed a collusion agreement with them. IdealAgent is a licensed broker. IdealAgent utilizes an elaborate price-fixing mechanism to allocate consumers toward a specific set of competitors and away from others. IdealAgent operates to restrain free trade. IdealAgent organizes direct competitors into a network.

For the US government, it is important to distinguish these two very different propositions and the distinctly different reasons behind them. Yelp! actively distributes unbiased data to consumers to improve commerce. IdealAgent actively distributes thousands of price fixing collusion agreements via the Internet to rake the largest number of broker commissions across the United States.

Collusion schemes such as IdealAgent are thriving in the broken real estate industry because brokers do not want to compete with one another. As fellow brokers, licensed just the same as IdealAgent, Partner Agents are fully aware that the blanket referral fee paid to IdealAgent promotes their services over others. This fee is easily incorporated into the commissions because consumers do not pay brokers out-of-pocket. Brokers feel safe to join the scheme because there are no upfront costs to join, the only price to join IdealAgent scheme is an expressed agreement to collude.

Combined, out of $85 billion in commissions spent each year in the United States, $10 to $15 billion are currently lost to consumers due to “paper” broker collusion schemes. IdealAgent is just one of such schemes.

An Open Real Estate Marketplace™ can reverse this trend and deliver savings to consumers instead of kickbacks, provided that brokers are unable to enter into uncompetitive hub-and-spoke conspiracies with other brokers.

Blanket Kickbacks and Unearned Fees

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. 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 on an individual basis, in a particular instance, for a particular transaction.

Sherman Antitrust Act (15 U.S.C. Chapter 1), effectively, requires all active real estate brokers to proactively compete for consumers without entering into blanket anticompetitive agreements that restrain free trade. An agreement or an understanding between brokers not to compete (or, in this case, to actively promote a network of competing brokers for a mutual profit) is a "per se" violation of antitrust regulations in the United States.

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 with competitors because such agreements always restrict free trade.

In August of 2021, Ideal Agent has also claimed to secure funding from Incenter LLC as its lead investor for its Series A round. Incenter LLC (https://www.incenterms.com/our-companies) is a Blackstone portfolio company headquartered in Saint Paul, Minnesota. With over 300 professionals employed worldwide, Incenter provides its lender clients operating in the mortgage and specialty finance markets with access to capital, secondary markets solutions and fulfillment services. The investment values Ideal Agent at nine figures, according to Ideal Agent CEO Steve Johnston. "It's not just the financials; they're strategic, meaning we get to open a nationwide title company with them, they have a national mortgage platform, property insurance, home warranty — everything that we don't do we have, we now have access to starting." According to the IdealAgent’s press release, the funding "will be used in part to expand Ideal Agent's offerings and expects to launch the Ideal Title and Ideal Rate platforms." What this means is that Ideal Agent’s kickbacks and price fixing scheme is about to become utilized further to by-pass RESPA regulations. Ideal Agent will further expand receive kickbacks from random brokers, while offering title, mortgage, property insurance, and home warranty services to consumers via affiliates, or however they it decides to concoct the scheme. Kickbacks are prohibited by RESPA for this exact reason.

Once the consumer is "farmed out" to a random IdealAgent Partner Agent, IdealAgent owes no duty of care to said consumer and takes no responsibility for the transaction, despite receiving a direct financial benefit from the home sale or purchase completed by a referred brokerage.

Actions of IdealAgent and IdealAgent Partner Agents directly increase the costs of owning homes in the United States due to added referral fees, consumer allocation practices, and reverse completion between brokers. In this scheme, both colluding parties benefit from offering consumers higher commissions. IdealAgent promotes Partner Agents as a way to limit competition with those agents outside of the network, and to encourage competing brokers to collude with them, thus limiting free-market competitive forces and steering consumers in self-interest.

As long as consumer allocation schemes, such as IdealAgent, 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.

IdealAgent Partner Program collusion scheme secretly harms real estate consumers and diminishes the efforts of competitive independent agents to provide a tangible service at an independently set competitive price.

The US government must treat IdealAgent Partner Agents and IdealAgent as competing brokers because they are equally licensed as brokers and they currently choose "at-will" to collude with one another. Licensed brokers are not allowed to promote the services of competitors, they are required to compete with competitors. A broker must promote their services, within their firm, directly to consumers and exist to solely help consumers buy, rent, and sell real estate.

Activities related to collusion and consumer allocation between licensed brokers do not promote open competition. A criminal violation of the Sherman Act carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The government must actively prosecute broker-to-broker collusion, otherwise, consumers will continue to overpay tens of billions in commissions each year.

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.

If you have a question or comment about federal consumer protection financial laws, including RESPA, you may submit it to the Office of Enforcement of the United States Consumer Financial Protection Bureau