HomeAdvisor has reached a settlement with the United States Federal Trade Commission (FTC) over alleged deceptive techniques used by HomeAdvisor to sell leads using unsubstantiated claims about the quality of the leads it sells 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 service providers who were allegedly misled by HomeAdvisor.
HomeAdvisor false and misleading claims
The FTC reached a settlement with HomeAdvisor, a subsidiary of Angie’s (formerly Angie’s List), in which the company was accused of making false claims about the leads it was selling.
An advertisement indicated that the deceptive practices had been going on since at least 2014.
HomeAdvisor is a home improvement recommendation website that provides information and ratings about home improvement companies.
Website users rate companies and provide in-depth reviews on the web pages of each contractor providing services in communities across the United States.
HomeAdvisor makes money by selling leads to businesses listed on the site.
False and misleading claims of FTC colleges by HomeAdvisor
The FTC complaint alleged that HomeAdvisor misled home contractors about which leads they were selling to.
According to the FTC:
The Federal Trade Commission’s March 2022 administrative complaint against HomeAdvisor charged that it had made false, misleading, or unsubstantiated claims since at least mid-2014 about the quality and source of leads that the company sells to prospecting service providers.
The complaint also alleged that HomeAdvisor often told service providers that leads led to jobs at rates much higher than could be proven.
Finally, the complaint alleged that HomeAdvisor sales agents erred in offering an optional one-month mHelpDesk subscription for free.
The FTC order to pay fraudulent home improvement providers was issued in January 2023 and was most recently approved by the FTC in April 2023.
The original FTC order in January 2023 referred to HomeAdvisor’s practices as deceptive.
The FTC press release declared:
“Today’s order requires HomeAdvisor to return home service providers millions of dollars and stop misleading them about the quality of their leads,” said Samuel Levine, director of the Federal Trade Commission’s Office of Consumer Protection. “Even as the nature of work and the economy changes, the FTC will continue to combat dishonest business practices that target consumers, workers, and small businesses.”
The authorized order requires HomeAdvisor to pay the defrauded providers $7.2 million.
It also requires HomeAdvisor to stop making false claims about leads, specifically that the leads are from people who are willing to hire service providers or have submitted an application directly to HomeAdvisor.
Read the FTC’s official press release about approving the order:
The Federal Trade Commission approves final order against HomeAdvisor, Inc. For deceptive marketing to potential clients for home improvement projects
Featured image by Shutterstock / Csaba Peterdi