The Federal Trade Commission alleged that HomeAdvisor, Inc., used “deceptive and misleading tactics in selling home improvement project leads” to gig workers.
The FTC finalized an order on Friday that requires the company to pay $7.2 million. The order also prohibits HomeAdvisor from making any additional false claims regarding its leads.
Dating back to 2014, the FTC said HomeAdvisor misled gig contractors regarding leads the company sold.
HomeAdvisor collects information on customers looking for home repairs from local contractors. After a potential customer fills out a form on the website, the lead goes to a contractor.
According to a complaint filed by the FTC, a service provider would pay $287.99 per year to join HomeAdvisor’s network. That is on top of paying a fee for each lead.
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The FTC alleged that contractors were matched with customers who were not in their area. They were also provided leads that do not match the services they provide.
The FTC also stated in its report that HomeAdvisor misrepresented leads by selling information on customers who did not intend to soon hire a service provider.
Following the order, affected gig workers will receive part of the payment. The FTC did not say how it intends to distribute funds.
“Even as the nature of work and the economy changes, the FTC will continue to combat dishonest commercial practices aimed at consumers, workers, and small businesses," said Samuel Levine, director of the FTC’s Bureau of Consumer Protection.
HomeAdvisor said the claims made by the FTC were "unfounded."
"HomeAdvisor was not found guilty of any wrongdoing, nor held liable for any of the FTC’s claims," the company said in a statement. "Though we had full confidence we would win the case, we chose to negotiate a settlement. To be clear, HomeAdvisor was not found to have acted illegally. Our decision to settle was to put our full focus back where it belongs: creating the products and experience you want and need to better grow your businesses, as well as make it easy for homeowners to find great pros."
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