HomeAdvisor reached a settlement with the United States Federal Trade Commission (FTC) over allegedly deceptive tactics used by HomeAdvisor to sell leads by using unsubstantiated claims about the quality of the leads it sold to home improvement professionals.
The Federal Trade Commission (FTC) is a federal agency charged with protecting and educating consumers as well as promoting competition.
It protects consumers from unfair business practices, including in this case home services providers who were alleged to be misled by HomeAdvisor.
HomeAdvisor False and Misleading Claims
The Federal Trade Commission (FTC) reached a settlement with HomeAdvisor, a company affiliated with Angi (formerly Angie’s List), in which the company was accused of making false claims about the leads it was selling.
An announcement noted that the deceptive practices were ongoing since at least 2014.
HomeAdvisor is a home improvement recommendation website that offers information and ratings about home improvement companies.
Website users rate companies and provide in depth reviews on webpages that are specific to each contractor offering services in communities across the United States.
The HomeAdvisor website earns money by selling leads to the businesses that are listed on the site.
FTC Alleges False and Misleading Claims By HomeAdvisor
The complaint by the FTC alleged that HomeAdvisor misled home contractors about the leads they were selling to them.
According to the FTC:
“The FTC’s March 2022 administrative complaint against HomeAdvisor charged that since at least mid-2014 it had made false, misleading, or unsubstantiated claims about the quality and source of the leads the company sells to service providers who are in search of potential customers.
The complaint also alleged that HomeAdvisor often told service providers that its leads result in jobs at rates much higher than it can substantiate.
Finally, the complaint alleged that HomeAdvisor’s sales agents misrepresented that the optional one-month mHelpDesk subscription was free.”
FTC order to pay defrauded home improvement service providers was made in January 2023 and was recently approved by the FTC at the of April 2023.
The original January 2023 FTC order referred to practices of HomeAdvisor as misleading.
The FTC press release announced:
“Today’s order requires HomeAdvisor to refund home service providers millions of dollars and stop misleading them about the quality of its leads,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. ‘Even as the nature of work and the economy change, the FTC will continue to combat dishonest commercial practices aimed at consumers, workers, and small businesses.'”
The approved order requires HomeAdvisor to pay $7.2 million service providers who were “defrauded.”
It also requires HomeAdvisor to stop making false claims about their leads, specifically that the leads are by people who are ready to hire service providers or that they have submitted a request directly to HomeAdvisor.
Read the official FTC press release about the approval of the order:
Featured image by Shutterstock/Csaba Peterdi