HomeAdvisor’s $7.2 million proposed settlement with FTC hits home with small businesses, gig workers

HomeAdvisor’s $7.2 million proposed settlement with FTC hits home with small businesses, gig workers

lfair

January 26, 2023 | 4:05PM

HomeAdvisor’s $7.2 million proposed settlement with FTC hits home with small businesses, gig workers



By

Lesley Fair






It’s a match that should have been made in Home Improvement Heaven: consumers looking for service providers and service providers looking for new clients. But the FTC alleged in a 2022 complaint that Denver-based HomeAdvisor, Inc. – a company affiliated with Angi, formerly known as “Angie’s List” – used misleading tactics to sell home improvement project leads to many small businesses operating in the gig economy. A proposed settlement in the case includes $7.2 million for refunds.



HomeAdvisor recruits service providers – for example, contractors or lawn care businesses – to join its network for a typical annual fee of $287.99. Once they’re enrolled, HomeAdvisor sells them – for an additional fee – leads of people who supposedly have home repair or maintenance projects. As part of the membership package, many service providers have paid an additional $59.99 for an optional one-month subscription to a service called mHelpDesk, software for scheduling appointments and processing payments.



The FTC charged that HomeAdvisor made false or deceptive claims about the quality and source of its leads. For example, HomeAdvisor claimed that service providers will get leads matching their skills and in their preferred locale, but according to the complaint , many of them didn’t. In addition, the FTC says HomeAdvisor often told service providers that its leads result in jobs at rates much higher than the company could substantiate. Another allegedly deceptive practice: misrepresenting that the optional one-month mHelpDesk subscription was free.



In addition to the $7.2 million financial judgment, the proposed order prohibits HomeAdvisor from making false or misleading claims about leads and bars misleading “free” representations.



Once the proposed settlement is published in the Federal Register, the FTC will accept comments for 30 days. Information about refunds for service providers won’t be available until the settlement is final. Bookmark the FTC’s refund page and check back later for more information about eligibility.

What can businesses glean from the announcement? The proposed settlement reflects the FTC’s commitment to challenging unfair, deceptive, or anticompetitive practices in the gig economy, as articulated in its September 2022 Policy Statement on Enforcement Related to Gig Work . It also builds on other efforts to protect gig workers and small businesses, including the Notice of Penalty Offenses on Money-Marking Opportunities and the pending Advance Notice of Proposed Rulemaking on Earnings Claims .