More than 100,000 contractors who signed up for a lead generation service provided by HomeAdvisor are due to get refunds amounting to more than $3 million. However the contractors $3 million payday is more of a cautionary tale than a victory.
This a final chapter in a long-running saga between the Federal Trade Commission and HomeAdvisor, which is now part of Angi and Angi’s Leads.
The FTC, which is charged with enforcing truth in advertising laws, claimed that HomeAdvisor vastly misrepresented the site’s services to convince contractors to pay for business leads. It also said the site charged for a scheduling service that was supposed to be provided for free.
The site says that business leads are from homeowners seeking help with plumbing, painting, electrical and other home-improvement projects. However, contractors complained to the Better Business Bureau that HomeAdvisor leads were worthless, stale, and bogus. The FTC says that contractors were misled.
HomeAdvisor says that the FTC action is baseless and that the company “was not found to have acted illegally.” Indeed, the case never went to trial because HomeAdvisor/Angi settled.
Contractors’ $3 million payday
However, this seeming consumer victory is more of a cautionary tale. Contractors likely paid 10 times more than they’ll get “refunded” through this $3 million payday.
To clarify, HomeAdvisor, which also operates as Angi’s Leads, hosts a website referral service for consumers seeking home improvement services — and for contractors seeking business.
The consumer service is free and generally well-reviewed.
The contractor service is expensive and generates thousands of complaints.
Contractor complaints
For contractors to get referrals, they must buy a membership and pay for leads. Leads are the names and phone numbers of consumers supposedly seeking the contractor’s service.
The membership costs roughly $300 annually and leads are extra. The site has no set price for leads. It determines the price based on the service and location. Contractors say each lead costs between $25 and $150.
Hundreds of thousands of contractors purchased HomeAdvisor memberships and business leads. The FTC says they were told that the business leads they got from the service would be both current and appropriate for their business. But contractors say that what they got was vastly different. And, while the FTC action settles a dispute over past charges, contractor complaints about this company persist.
One complaint, filed in October 2023, maintains that of 13 leads only 2 were viable. The rest were people who either didn’t answer their phones, or who said they’d never heard of HomeAdvisor.
Another complaint cries: “Over $10,000.00 in fake leads! I have put in multiple requests to take down all of the fake ones that are sent my way but they insist that the information they send is accurate and real people…[but] phone numbers don’t reach actual people or sometimes even ring it all, emails don’t work, and a lot of customers that I did reach were annoyed that I was even reaching out to them.”
Settlement agreement
The FTC filed a complaint against the company two years ago. Earlier this year, HomeAdvisor agreed to settle “to put our full focus back where it belongs.” The FTC is using the funds it got from HomeAdvisor to send 110,372 refund checks to contractors.
Payments are not graduated based on who might have been most damaged by the alleged fraud. Instead, the FTC is splitting the $3 million equally among contractors who paid for HomeAdvisor leads. That means each contractor will get a check for $28.99 — less than one-tenth of HomeAdvisor’s membership fees. Recipients must cash their refund checks within 90 days or they’ll expire.
Another $4 million has apparently been set aside for contractors who were allegedly duped into believing that an optional scheduling and payment processing service called mHelpDesk would be provided to them for free for one month. The FTC says they were charged $59.99 for this service immediately, despite the “free for one month” claim.
The agency is sending 91,273 claims forms to businesses that paid for mHelpDesk. Contractors who believe they were deceived into paying for this supposedly free month must submit a claim for an extra $59.99 refund by February 26, 2024.
In other words, the maximum amount that any individual contractor will receive from this contractors’ $3 million payday is $88.98. Meanwhile, contractors complaining to the Better Business Bureau about HomeAdvisor say they were duped out of thousands of dollars.
Complaints and reviews
It’s worth noting that warnings about HomeAdvisor’s business practices are easy to find, if you read the site’s terms. Unfortunately, many burned contractors said they believed sales assurances and didn’t read HomeAdvisor’s “terms of use.”
The terms are the contract governing what HomeAdvisor can do.
What do these terms say? That HomeAdvisor and Angi take no responsibility for whether leads are real or valuable. Moreover, while the site’s sales people tell contractors that they can set limits on how much they’ll pay for leads, HomeAdvisor’s terms allow the company to ignore those limits.
Moreover, HomeAdvisor’s terms give the site the right to use the member contractor’s name and likeness in advertisements to generate business for HomeAdvisor — indefinitely. What that means is HomeAdvisor can place advertisements using the member contractor’s business name, but “modify” that listing so it includes HomeAdvisor’s phone number, not the contractor’s.
If a consumer responds to that advertisement, asking to hire the contractor they thought they were calling, HomeAdvisor can charge that contractor hundreds of dollars for the “lead.” Worse, it can also sell that lead — the name and phone number of the person specifically looking for a specific contractor — to other contractors seeking business in its network.
Better options
Not surprisingly, HomeAdvisor gets SideHusl.com‘s lowest rating, indicating it’s an abysmal place for contractors to find work.
A far better option for contractors seeking business is a social media site called Nextdoor. Nextdoor is designed to connect consumers living within a tight geographic market, helping them communicate about things of local interest, including crime and lost pets. But because neighbors often seek business and service referrals from friends and neighbors, it also has become a hotspot for job leads.
The site encourages businesses to set up a business profile and pay for advertising. And, it gives business advertisers the ability to broadcast their ads in any neighborhood they want to target.
However, some of the best advertising here is done through word-of-mouth via free customer referrals. If you offer a local service — from housekeeping to carpentry — you should at least sign up for a free personal account.
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