HomeAdvisor has reached a settlement with the United States Federal Trade Commission (FTC) over alleged deceptive tactics used in selling leads by making unsubstantiated claims about the quality of those leads to home improvement professionals.
The Federal Trade Commission (FTC) is a federal agency dedicated to protecting and educating consumers and promoting competition. It safeguards consumers from unfair business practices, including those affecting home services providers that were allegedly misled by HomeAdvisor.
HomeAdvisor False and Misleading Claims
The FTC arrived at a settlement with HomeAdvisor, a company associated with Angi (formerly Angie’s List), accusing the company of making false claims about the leads it was selling. An announcement highlighted that these deceptive practices have been ongoing since at least 2014.
HomeAdvisor is a home improvement recommendation platform that provides information and ratings about various home improvement companies. Users of the website rate these companies and offer detailed reviews on pages dedicated to each contractor offering services in different U.S. communities. The HomeAdvisor website generates revenue by selling these leads to the businesses listed on the site.
Screenshot of HomeAdvisor sales lead page from March 14, 2016, courtesy of Internet Archive
FTC Alleges False and Misleading Claims By HomeAdvisor
The FTC’s complaint alleged that HomeAdvisor misled home contractors about the quality of the leads they were purchasing.
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 much higher rates than it can substantiate. Finally, the complaint alleged that HomeAdvisor’s sales agents misrepresented that the optional one-month mHelpDesk subscription was free."
The FTC order, issued in January 2023 and approved at the end of April 2023, demanded that HomeAdvisor refund home improvement service providers millions of dollars and stop misleading them about the quality of its leads. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated:
"Today’s order requires HomeAdvisor to refund home service providers millions of dollars and stop misleading them about the quality of its leads. 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 mandates that HomeAdvisor pay $7.2 million to service providers who were "defrauded." It also requires the company to cease making false claims about their leads, such as asserting that the leads are from individuals 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:
FTC Approves Final Order against HomeAdvisor, Inc. for Deceptively Marketing its Leads for Home Improvement Projects
Featured image by Shutterstock/Csaba Peterdi
