The Federal Trade Commission has finalized a consent order against HomeAdvisor, Inc. following a public comment period. In March 2022, the FTC filed an administrative complaint against Denver-based HomeAdvisor, which is affiliated with Angi (formerly Angie’s List), for misleading and deceptive marketing tactics to provide leads to service providers and contractors who offer home services like kitchen remodeling, doors and windows, or lawn care. Many of these providers are considered gig workers.
The FTC alleged that, since at least mid-2014, HomeAdvisor made false, misleading or unsubstantiated claims about the source and quality of the leads for which service providers pay. It also misled those contractors regarding the cost of an optional one-month subscription to a software platform that HomeAdvisor sold to their clients. These actions and misrepresentations caused service providers to waste time following up on sub-par leads that didn’t yield business and additional time trying to get refunds from HomeAdvisor.
Service providers and contractors who signed up to be a part of the HomeAdvisor network paid an annual membership fee of $287.99, along with an additional fee for each lead received. Many of those same customers paid for an optional one-month subscription for mHelpDesk, a software app that assists service providers to schedule appointments and process payments, that was supposed to be free. If not canceled, mHelpDesk automatically renewed at $59.99 a month.
“Gig economy platforms should not use false claims and phony opportunities to prey on workers and small businesses,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, in a March 11, 2022 news release when the administrative complaint was initially filed. “Today’s administrative complaint against HomeAdvisor shows that the FTC will use every tool in its toolbox to combat dishonest commercial practices.”
Deceptive marketing prohibited
The final FTC order prohibits HomeAdvisor and its staff, agents and others affiliated with the company from misrepresenting or making false or misleading statements to service providers regarding potential leads. In addition, HomeAdvisor must not say a product or services is free if it is not free or when it increases the price of another product or service. Misleading and deceptive marketing practices are prohibited.
To resolve the issue, the FTC’s final decision and order includes the following monetary relief:
- HomeAdvisor must pay the FTC $4,448,000.
- HomeAdvisor must pay $2,752,000 to the mHelpDesk redress fund.
Redress due
The money paid to the FTC will be deposited into a fund to be used for relief including consumer redress and expenses for the administration of the fund.
- The FTC may use up to $3,200,000 for payments of up to $30 per membership for relief for the allegations made in Counts I and II of the order.
- The FTC may use up to $4,000,000 for payments of up to $59.99 per mHelpDesk membership for relief for the allegations made in Count III.
- The FTC may not use more than $448,000 to be paid from the mHelpDesk funds to administer the fund and making payments from the fund.
- If claims against the mHelpDesk fund exceed 800,000, a supplemental payment may be required from HomeAdvisor.
- The FTC is authorized to make payments from the Leads Fund and the mHelpDesk fund to the same person where appropriate.
The commission voted 3-0 to approve the final consent order and response to those who submitted public comments.
HomeAdvisor powered by Angi
A visit to the HomeAdvisor powered by Angi website includes a home page link that says “Join Our Pro Network” and the FAQs explain that pros will pay an annual fee and they will be charged for leads based on project type and location. HomeAdvisor does not specify what the annual fee is.
“Leads are not guaranteed jobs – it is up to you to win the work once you get a lead,” the website says.
If a service provider acts on a lead that isn’t a good fit, they can request a “lead credit,” but refunds do not appear to be an option. As of this writing, neither HomeAdvisor nor Angi had published a public response to the order.
Insider Take
The FTC is aggressively going after companies that it deems to be misleading consumers. They have made it clear that deceptive marketing practices will not be tolerated. The FTC has filed countless administrative complaints and lawsuits – via the Department of Justice – against companies like HomeAdvisor where the FTC alleges businesses and consumers have been misled. The obvious solution is for companies to act legally, ethically and transparently at all times. But some of them have gotten away with bad behavior and dark patterns for so long that it has become their way of doing business. The lesson here is that the FTC is not backing down, and it isn’t a question of if they will catch a bad actor, it is a question of when.
