HomeAdvisor, a prominent lead generation service for home service companies, was penalized by the United States Federal Trade Commission (FTC) for deceptive practices related to the quality of their lead generation services.
As a protector of consumers and promoter of competition, the FTC holds businesses accountable for any unfair practices, safeguarding consumers from deceptive operations. Home service providers who allegedly fell prey to HomeAdvisor’s misleading strategies have been covered by the FTC’s umbrella of protection.
HomeAdvisor, which is linked to Angi (formerly Angie’s List), faced accusations of making false claims about the leads they sold to home improvement professionals. The FTC’s announcement highlighted that these deceptive practices have been ongoing since at least 2014.
Operating as a home improvement recommendation platform, HomeAdvisor allows users to rate and review businesses, thereby earning revenue by selling leads to the listed companies. However, the FTC’s charges against HomeAdvisor allege that the company misrepresented the quality of the leads they sold to service providers.
The FTC claimed that HomeAdvisor had been making unsubstantiated claims about their leads’ quality and source since mid-2014, often exaggerating the potential conversion rates of these leads. Moreover, they are accused of falsely claiming that their optional one-month mHelpDesk subscription was free.
The order demanding HomeAdvisor refund the defrauded service providers were initially made in January 2023 and received approval by the FTC in April 2023. The practices employed by HomeAdvisor were described as misleading in the FTC’s original order.
The FTC’s official statement highlighted its commitment to combating dishonest commercial practices aimed at consumers, workers, and small businesses. The approved order mandates HomeAdvisor to refund millions of dollars to defrauded service providers and discontinue false claims about their leads.
The $7.2 million penalty imposed on HomeAdvisor will go towards compensating the “defrauded” service providers. Further, the company must cease any false claims about their leads, specifically the ones stating that leads are by individuals ready to hire service providers or that they have submitted a request directly to HomeAdvisor.
For more information on the FTC’s decision and the approved order, you can view the official FTC press release.