Excerpt
HomeAdvisor was fined for misleading users about the cost of an optional one-month subscription and making false representations about its services.
Our analysis
HomeAdvisor's actions centered on deceptive representations made through its sales agents and marketing materials.
- HomeAdvisor falsely portrayed the quality, characteristics, and source of the leads it provided to its online service providers*.* HomeAdvisor claimed that these leads were from individuals actively seeking to hire service providers soon, though many of them were not.
- HomeAdvisor asserted that** service providers would only receive leads matching their services and geographical preferences, despite many instances where this was not the case.
-HomeAdvisor's representation that leads came from individuals knowingly seeking assistance in selecting service providers was contradicted by the fact that many leads were obtained from third-party sources without disclosing their affiliation with HomeAdvisor.
- HomeAdvisor's sales agents misled **service providers regarding the cost of an optional one-month subscription to mHelpDesk, a field service software. HomeAdvisor falsely represented that the first month of this subscription was free with an annual membership, when in reality, it increased the annual membership cost by $59.99.
These deceptive practices of HomeAdvisor, constitute violations of Section 5(a) of the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices in commerce. The deceptive designs employed by HomeAdvisor in this context involved concealing costs and misleading service providers about the nature and quality of the leads they were purchasing.
Outcome
A consent order mandated that the company refrain from making misleading or unsubstantiated representations about its products or services, specifically prohibiting the false representation of a product or service as free when it is not or when it impacts the price of another product or service. Additionally, the order required the company not to misrepresent any other material facts related to the content or key features of their Leads, and imposed a fine of $7.2 million.
Parties
Federal Trade Commission and HomeAdvisor Inc.
Case number
Docket No. D-9407
Decision
Related deceptive patterns
Sneaking involves intentionally withholding or obscuring information that is relevant to the user (e.g. additional costs or unwanted consequences), often in order to manipulate them into taking an action they would not otherwise choose.
Hidden costs involve obscuring or omitting additional fees, charges, or costs until the user is well into the purchasing or sign-up process. By that point, the user has already invested time and effort into the transaction and is more likely to proceed despite the unexpected costs.
Related laws
Prohibits deceptive acts or practices that misrepresent or omit material facts.