Burning Down the House: FTC Accuses HomeAdvisor, Inc. of Deception in Selling Leads for Home Improvement Projects | Venable LLP

On Friday, March 11, the Federal Trade Fee (FTC) submitted an administrative complaint from HomeAdvisor, Inc., charging it with making use of misleading and misleading ways to promote qualified prospects for residence enhancement assignments to tiny companies, which include little “gig-economy” personnel. The motion underscores the latest administration’s hard work to shield personnel, particularly those engaged in the gig financial system via massive platforms.

The FTC alleges that due to the fact at minimum 2014, HomeAdvisor—a well-liked provider that matches service providers with individuals trying to get property improvements—made untrue, misleading, and unsubstantiated promises about the excellent and supply of prospects it sells, and about the probability that the potential customers would consequence in precise employment. According to the grievance:

• HomeAdvisor informed assistance suppliers that the conversion costs at which qualified prospects really resulted in residence advancement employment had been greater than what HomeAdvisor’s personal knowledge indicated.
• HomeAdvisor represented that the prospects it sells replicate buyers who intend to employ the service of a service company soon, when in fact several individuals do not.
• HomeAdvisor represented that its leads came straight from buyers who seek out HomeAdvisor’s support in deciding upon a company supplier, even however numerous sales opportunities have been also bought from affiliates.
• HomeAdvisor’s revenue brokers misrepresented the charge of the optional application membership offered to HomeAdvisor’s community users that will help with scheduling appointments and processing payments. The FTC alleges that income agents instructed services providers that the very first month is free of charge with an annual membership package deal, when genuinely the initially month of the subscription is not absolutely free.

The FTC purports that the alleged misrepresentations stress service companies with better time spent on pursuing decreased-high quality leads thought to be worthwhile, and on trying to get refunds from HomeAdvisor for those people qualified prospects.

The litigation from HomeAdvisor illustrates a expanding concentration of the FTC on the gig economic climate and the part of the platforms that sit in between the individuals and services companies. FTC Bureau of Shopper Defense Director Samuel Levine emphasized that gig-economy platforms “should not use bogus statements and phony alternatives to prey on personnel and small corporations,” and that this criticism “shows that the FTC will use each tool in its toolbox to battle dishonest industrial procedures.” FTC Chair Khan also highlighted the purported likely for market place abuse when gig-economic climate corporations have interaction in misleading earnings statements.

Late last calendar year, the FTC sent notices of penalty offenses to much more than 1,100 firms that pitch dollars-creating opportunities—including gig companies and significant names like Amazon, Uber, DoorDash, and Lyft—and warned them that the FTC won’t hesitate to target them with civil penalties if they deceive shoppers or gig workers about opportunity earnings.

The greater notice that the gig economy is getting from the FTC must provide as a wake-up call for technological innovation firms furnishing matching or aggregating services. In addition to ensuring their consumer-experiencing ads and applications are transparent, truthful, and truthful, these providers ought to pay consideration to how they recruit services suppliers to join the platform and what representations are produced about their potential acquired income.