The Federal Trade Commission on Monday (Aug. 1) fined online home buying firm Opendoor Labs $62 million, saying it must stop cheating potential home sellers by tricking them into thinking that they could make more money selling their homes to Opendoor, according to an FTC press release.
Opendoor allegedly pitched potential sellers using misleading and deceptive information, and most customers who sold to Opendoor made thousands less than they would have using a more traditional approach, the press release says.
“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” FTC Bureau of Consumer Protection Director Samuel Levine said in the press release. “There is nothing innovative about cheating consumers.”
Opendoor, which buys homes directly from buyers, claimed to use cutting-edge technology to create “market-value” offers and reducing transaction costs compared with traditional home sales process, including charts showing that consumers would almost always make more money through the Opendoor service.
Opendoor also violated the law by misrepresenting its use of projected market value prices when making offers to buy homes, saying it made money from fees rather than from buying low and selling high and incorrectly reporting savings related to repair costs and selling their homes, according to the FTC release.
In a statement released Monday, Opendoor said, “While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed.”
The company added, “Importantly, the allegations raised by the FTC are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago. We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience.”
Related: Real Estate Platform Opendoor Launches Mortgage Finance App
In June, Opendoor launched a financing app that the company claims lets consumers get pre-approved for a mortgage in under two minutes. The app is part of the company’s suite of products, which include Buy with Opendoor, Opendoor Backed Offers, and Opendoor Complete.
The company said its technology identifies loan options based on the customer’s needs and criteria, including mortgage rate, guidelines and terms and the down payment required.
Opendoor said the app processes more than 10,000 data points in seconds to determine the maximum home purchase price a buyer can afford based on their qualifications and the minimum down payment for available loan options.
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