Agency: Federal Trade Commission (FTC)Washington
Description:
On March 11, 2022, the Federal Trade Commission (FTC) issued an administrative complaint against HomeAdvisor, Inc. alleging it used deceptive and misleading tactics in selling home improvement project leads to service providers since 2014.
The complaint alleges HomeAdvisor made false, misleading, or unsubstantiated claims about the quality and source of the leads the company sells to service providers in search of potential customers. According to the FTC’s complaint, HomeAdvisor told service providers that its leads resulted in actual home improvement jobs at rates higher than HomeAdvisor’s own data supported. They guaranteed to only send leads that match the types of services the service professional provides and their geographic preferences, even though many service providers receive leads that do not match the types of services they provide or their geographic preferences. As a result of these misrepresentations service providers often spend time following up on leads that are below the quality HomeAdvisor promises, and even more time seeking refunds from the company for those leads.
Further, the FTC complaint alleges HomeAdvisor represented that the leads were from interested customers that sought HomeAdvisor’s assistance, when in reality many of the leads HomeAdvisor sells are purchased from third parties who collect information from potential customers without first revealing their affiliation with HomeAdvisor.
In addition, the complaint alleges HomeAdvisor misled service providers about the cost of an optional one-month subscription to a software platform, mHelpDesk, which HomeAdvisor sold along with its leads. HomeAdvisor’s sales agents misrepresented the cost of the subscription by telling service providers that the first month is free with an annual membership package. In reality, the first month of the subscription is not free; resulting in a package that costs $59.99 more than properly informed service providers might have otherwise paid.
The FTC seeks to issue a “cease and desist order” against HomeAdvisor from the violations of law charged in the Complaint. If successful the FTC may order relief against HomeAdvisor appropriate to correct or remedy the effects of the unfair or deceptive practices or of any or all of the conduct alleged in the complaint.
HomeAdvisor has provided an answer to the FTC complaint claiming that the Complaint is baseless. They state that the FTC’s complaint reflects fundamental misunderstandings of HomeAdvisor’s business, the vast service provider and homeowner networks that HomeAdvisor serves, and the lead generation industry generally. Further HomeAdvisor claims the complaint lacks actual evidence of systemic misrepresentations in HomeAdvisor’s marketing statements, intent by HomeAdvisor and those who operate its business to entice membership through false promises to service providers, actual reliance upon alleged misrepresentations by HomeAdvisor’s service provider members, or quantifiable financial gain by HomeAdvisor (or loss to service providers) that is tied to any alleged misrepresentations. They further claim that HomeAdvisor established an innovative on-line marketplace providing great value to service providers and homeowners. HomeAdvisor’s response claims that the FTC complaint allegations about task and geographic matches are misdirected; allegations about leads generated by affiliates are conclusory and unsupported; the complaint disregards HomeAdvisor's extensive lead filtering process; the complaint mischaracterizes representations about “win rates”; and the complaint disregards services providers’ return on investment. They also state that HomeAdvisor stopped offering mhelpdesk over two years ago.
The case is currently pending. A prehearing scheduling conference will be held on April 25, 3:00 p.m. EDT and on November 9, 2022, at 10:00 a.m., at the FTC offices in Washington, DC an FTC Administrative Law Judge will hold a hearing on the charges alleged in this Complaint.
More information about the complaint and related documents are available on the FTC’s website.
Date of Action: 3/11/2022