HomeAdvisor’s $7.2M settlement with FTC has big impact on small businesses and gig workers

This is the kind of matchmaking that should happen in home improvement heaven: consumers looking for service providers, service providers looking for new customers. But the FTC alleged in a 2022 complaint that Denver-based HomeAdvisor, Inc., an Angi-related company formerly known as “Angie’s List,” used misleading tactics to market to many small businesses operating in the gig economy. Home improvement projects. The proposed settlement in the case includes a refund of $7.2 million.

HomeAdvisor recruits service providers, such as contractors or lawn care businesses, to join its network for a typical annual fee of $287.99. Once they sign up, HomeAdvisor sells them (for an additional fee) leads to people who allegedly have home repair or maintenance projects. As part of their membership packages, many providers pay an additional $59.99 for an optional one-month subscription to a service called mHelpDesk, software for scheduling appointments and processing payments.

The FTC alleged that HomeAdvisor made false or deceptive representations about the quality and origin of its sales leads. For example, HomeAdvisor claims that service providers will get leads in their preferred areas that match their skills, but according to complaints, many of them don’t do that. Additionally, the FTC said HomeAdvisor frequently told service providers that its leadership position resulted in far greater job opportunities than the company could substantiate. Another alleged deception involves falsely claiming that an optional one-month subscription to mHelpDesk is free.

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

Once the proposed settlement is published in the Federal Register, the FTC will accept comments for 30 days. No information regarding service provider refunds will be available until final resolution. Bookmark the FTC’s Refunds page and check back later for more information about eligibility.

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