FTC accuses HomeAdvisor of cheating small businesses with leads

Work leads that service providers received through their HomeAdvisor subscription often did not translate into subcontracted work.

That’s according to the Federal Trade Commission (FTC), which has accused HomeAdvisor of misleading service providers about the quality and source of the leads the site provided.

According to the FTC, HomeAdvisor (an Angi-affiliated company) has been misleading service providers since 2014.

FTC Strikes HomeAdvisor for Misleading Small Business Service Providers

Mitchell J. Katz, FTC Office of Public Affairs, said HomeAdvisor made false claims about the rate at which leads would turn into jobs.

“They (HomeAdvisor) advertised with a percentage of referrals that became jobs booked to do work,” explains Katz. “Those percentages were higher than HomeAdvisor’s own data supported.”

Subscribers to the website are service providers, such as contractors and lawn care specialists. In addition to an annual subscription fee ($288), the service providers pay per lead. They can also add a monthly subscription ($60) to mHelpDesk, work scheduling and payment processing software.

The Resources and Costs for HomeAdvisor Leads

HomeAdvisor generates leads based on actual site visits from consumers. Leads also come from third-party partners, who get leads through web-based forms that are completed by consumers.

According to HomeAdvisor, the cost per lead varies by type of work and geographic region. Subscribers can set a “spending target” for the amount of money they’re willing to spend on leads in a 28-day period. But subscribers “may exceed the spending target and need to check bills,” according to the HomeAdvisor site.

The cost per lead through HomeAdvisor ranges from an average of $15 to $60, but can reach $100 per lead in certain markets.

Additional FTC Fees

According to the FTC, HomeAdvisor also:

Delivered leads that didn’t match the type of work the service provider does. For example, a roofer was given a lead for a job involving drywall. Provided leads that did not match the service provider’s preferred geographic location. Misrepresentation of the costs associated with an annual subscription add-on called mHelpDesk. There was no free month and mHelpDesk was automatically renewed monthly. Service providers asking for refunds — for bad leads or the mHelpDesk subscription — were unsuccessful.

Katz said a formal hearing on the charges will help before an administrative judge. That’s not planned yet.

Image: Depositphotos


This post FTC accuses HomeAdvisor of cheating small businesses with leads was original published at “https://smallbiztrends.com/2022/03/ftc-charges-homeadvisor-misleading-small-business.html”

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