The FTC accused HomeAdvisor of misleading businesses, including those operating in the gig economy, when selling home improvement project leads, the regulator said in a Tuesday (Nov. 28) press release.
As a result, the agency is now issuing more than $3 million in refunds to affected businesses and providing an opportunity for additional claims, according to the release.
Responding to the FTC’s claims in a note posted on its own website, HomeAdvisor said it had full confidence that it would win the case but chose to negotiate a settlement.
“To be clear, HomeAdvisor was not found to have acted illegally,” the company said in its note addressed to home services professionals. “Our decision to settle was to put our full focus back where it belongs: creating the products and experience you want and need to better grow your businesses, as well as make it easy for homeowners to find great pros, like you.”
The company added in the notes that it has supported more than 200,000 home services pros and that tens of thousands of them have been with HomeAdvisor for more than five years.
“That kind of longevity doesn’t happen to fraudulent companies,” the firm said in the note. “It comes from putting customers first.”
The FTC’s complaint, filed in March 2022, alleged that HomeAdvisor made false, misleading or unsubstantiated claims about the quality and source of the leads it sold to home service providers, the release said. These claims were made since at least mid-2014, potentially affecting numerous businesses over the years.
The agency also found that HomeAdvisor misrepresented the benefits of its annual membership, specifically regarding a free month of mHelpDesk, an optional scheduling and payment processing service, per the release. Instead of providing the promised free month, HomeAdvisor charged an additional $59.99 for the first month.
In response to these allegations, the FTC is now taking action to compensate affected businesses, according to the release. A total of 110,372 checks are being sent to eligible home service providers who were misled about the quality of customer leads they would receive with their HomeAdvisor membership.
Additionally, the agency is sending 91,273 claims forms to businesses that paid for mHelpDesk, allowing them to submit a claim for further refunds, the release said. The deadline for claim submission is Feb. 26, 2024.
When the FTC filed its complaint in March 2022, it said HomeAdvisor told service providers that its leads resulted in home improvement jobs at rates higher than what its data showed.
“Gig economy platforms should not use false claims and phony opportunities to prey on workers and small businesses,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said at the time.
Responding to the complaint in March 2022, an Angi spokesperson denounced the charges and said the company would fight them.
“We’ve been in business for over 20 years,” the spokesperson said. “That longevity is thanks to putting our customers first.”