The Federal Trade Commission has filed an administrative complaint against HomeAdvisor, and by extension Angi, alleging that the home services platform misrepresents and defrauds service providers.
The FTC complaint cites Denver-based HomeAdvisor Inc., also doing business as Angi Leads, also doing business as HomeAdvisor Powered by Angi.
“Since at least the middle of 2014 it (HomeAdvisor) has made false, misleading, or unsubstantiated claims about the quality and source of the leads the company sells to service providers, such as general contractors and small lawn care businesses, who are in search of potential customers,” the agency said in a news release on its filing.
“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. “Today’s administrative complaint against HomeAdvisor shows that the FTC will use every tool in its toolbox to combat dishonest commercial practices.”
The FCC complaint mirrors the allegations in a pending class-action lawsuit against HomeAdvisor filed by a Haverford, Pennsylvania, law firm representing more than 1,000 service providers.
HomeAdvisor’s response to the FTC complaint
HomeAdvisor disputes the claims detailed in the FTC complaint. A HomeAdvisor spokesperson said Wednesday, “We will vigorously fight these outrageous allegations.
“The lawsuit is meritless and shows how out of touch the FTC is with the enterprising American small business owner of today,” she added.
“The FTC allegations against HomeAdvisor are based on a false narrative using a small handful of cherry picked, incomplete, and out-of-context recorded sales calls – to serve their agenda. The reality is much different.”
Allegations in the FTC Complaint
The three-count complaint alleges HomeAdvisor:
- Misrepresents the quality and source of job leads it sends to service providers.
The FTC claims these leads often come from third-party providers and HomeAdvisor admits that the quality of these leads varies greatly. - Inflates the rates at which its leads convert to jobs for service providers.
The FTC says sales agents trying to sign up service providers for HomeAdvisor “make false, misleading, or unsubstantiated representations about the quality, characteristics, and source of HomeAdvisor’s leads and the rates at which those leads convert into jobs.”
- Misleads service providers about the cost of its mHelpDesk software.
The FTC complaint says HomeAdvisor sales agents and marketing material aimed at service providers say the first month of mHelpDesk is free, when in fact it is not, the FTC says. Furthermore, service providers say they did not know mHelpDesk begins billing monthly at $59.99 after that first month.
What is HomeAdvisor?
HomeAdvisor, now part of Angi Home Services, is the largest home services platform in the world.
HomeAdvisor and Angi’s history:
HomeAdvisor was founded in 1996 as ServiceMagic. In 2004, digital media brand owner IAC acquired ServiceMagic for an undisclosed price. In 2008, ServiceMagic rebranded as HomeAdvisor.
HomeAdvisor acquired Angie’s List in 2017 to become Angi Homeservices Inc, and now a public company known as Angi Inc. and trading under the stock symbol ANGI. Angi’s website says it has nearly 250,000 service providers and that it has helped more than 150 million homeowners since 1995.
The HomeAdvisor spokeswoman added Wednesday: “In the last year alone, our platform supported more than 200,000 home pros servicing over 30 million home improvement, repair and maintenance projects — generating billions of dollars in jobs for these small businesses. Bad leads and poor sales practices are not good for business which is why we actively fight against them.”
Details of the 3-count complaint
Quality and source of leads
The FTC complaint, citing redacted sales call scripts, says, “HomeAdvisor’s sales agents have represented to service providers that HomeAdvisor’s leads concern people who knowingly sought HomeAdvisor’s assistance in selecting a service provider.”
The complaint then details promotional material for HomeAdvisor’s Market Match, a lead for which service providers pay a higher fee.”HomeAdvisor’s marketing materials have also represented that HomeAdvisor’s leads concern people who knowingly sought HomeAdvisor’s assistance in selecting a service provider.”
In fact, since 2014, the FTC says that contrary to HomeAdvisor representations, “in [redacted] instances … the leads service providers received, respectively:
a. Did not concern individuals who intend to hire a service provider soon;
b. Did not concern projects that match the types of services that service providers have expressed they perform;
c. Did not concern projects that match the geographic areas that service providers have expressed they serve; or
d. Did not concern individuals who knowingly sought HomeAdvisor for assistance in selecting a service provider.
As for the quality of these leads, the FTC complaint says, “Indeed, a document HomeAdvisor’s parent company filed publicly with the Securities and Exchange Commission acknowledged that ‘the quality and convertibility of leads generated through third-party arrangements are dependent on many factors, most of which are outside our control.'”
Rates at which leads convert to jobs
The FTC complaint alleges that HomeAdvisor’s sales agents have represented to service providers that HomeAdvisor’s leads convert into jobs at rates well above what HomeAdvisor can substantiate.
Citing HomeAdvisor’s own calculations of the average rate at which a lead purchased by a service provider converts to a job and the average “win rate” for Market Match leads, the FTC complaint says, “HomeAdvisor’s sales agents have represented falsely inflated
win rates to service providers.”
The complaint then includes redacted details of how sales agents have described these leads.
The cost of mHelpDesk software
Again, citing sales calls, the FTC says HomeAdvisor in numerous instances “has represented to service providers that the cost of an annual membership is $347.98, and includes a free one-month subscription to mHelpDesk.”
In 2014, HomeAdvisor acquired a majority stake in mHelpDesk.
“In fact, the cost of an annual membership is $287.99. The $347.98 price has represented the cost of an annual membership plus one month of mHelpDesk, an optional, add-on product that costs $59.99 per month and automatically renews after the first month.”
Furthermore, the FTC complaint says, “After HomeAdvisor’s sales agents have added a month of mHelpDesk to service providers’ annual memberships, service providers frequently have not learned that they were charged an additional $59.99 because the $347.98 charge has appeared as a single line item on the service provider’s receipt and credit card bill.”
What’s Next after the Filing of the FTC Complaint
HomeAdvisor has 14 days to file an answer to the complaint, which was issued on March 11, 2022. An administrative law judge has been appointed. The FTC has scheduled a hearing on Nov. 9, 2022, at its Washington, D.C., offices on the charges set forth in the complaint.
Main Photo Credit: Jeff Herman | HomeAdvisor homepage on laptop
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