FTC Charges HomeAdvisor with Cheating Small Businesses on Leads

ftc charges homeadvisor with misleading service

Work leads that service providers got through their subscription to HomeAdvisor often didn’t translate into contracted work.

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

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

FTC Slaps HomeAdvisor for Misleading Small Business Service Providers

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

“They (HomeAdvisor) advertised a rate as a percentage of referrals that became booked jobs to do work,” Katz explained. “Those rates 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 may also add a monthly subscription ($60) to mHelpDesk, which is software for scheduling work and processing payments.

The Sources and Fees for HomeAdvisor Leads

HomeAdvisor generates leads from actual visits to the site from consumers. Leads also come from 3rd party affiliates, which get leads via web-based forms filled out by consumers.

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

The cost per lead via HomeAdvisor ranges from $15 to $60 on average but can be as high as $100 per lead in certain markets.

Additional FTC Charges

According to the FTC, HomeAdvisor also:

  1. Provided leads that didn’t match the type of work the service provider does. For example, a roofer got a lead for a drywall job.
  2. Provided leads that didn’t match the service provider’s preferred geographic location.
  3. Misrepresented the fees associated with an annual subscription add-on called mHelpDesk. There was no free month and mHelpDesk automatically renewed monthly.
  4. Service providers who sought refunds – for poor leads or the mHelpDesk subscription – were not successful.

Katz said that a formal hearing on the charges will be help before an administrative law judge. That has not yet been scheduled.

Image: Depositphotos

Lisa Price Lisa Price is a staff writer for Small Business Trends and has been a member of the team for 4 years. She has a B.A. in English with a minor in journalism from Shippensburg State College (Pennsylvania). She is also a freelance writer and previously worked as a newspaper circulation district manager and radio station commercial writer. In 2019, Lisa received the (Pennsylvania) Keystone Award.