FTC suggest 7.2 million dollar fine against Home Advisor for “deceptive practices”

Jun 16, 2023

When you have a remodeling business, you have to create a way to get calls from prospective clients. It’s nice to have referrals – but eventually – you’re going to need to make the phone ring! Here’s the truth about what contractors go through in attempting to get enough leads to survive.

The average remodeling company has a revenue of $500,000 to 1 million in yearly sales. (Less than 10% of remodelers do over one million per year.) Our industry is flush with sole proprietors that have one to three employees. These owners have to figure out a way to occasionally take off their tool belts and go see people about another prospective project. This is time consuming, tedious, and costly. Adding to this balancing act, is the fact that most remodelers have to pay for their leads! So, you’re a small company and every dollar counts – then – you have to leave the job you’re working on to go see someone about another job – then – your current job inevitably slows to a snail’s pace without you there – then – the “sales call” you just went on, wanted something completely out of your area of expertise. To add insult to injury… that lead just cost you up to four hundred dollars. Ouch!

Most contractors have found that the best way to obtain enough leads – just to survive – is by subscribing to Angie’s List, Home Advisor, or similar lead-generating companies. However, if you’ve had any personal experience in this venue, you might not be surprised to hear that the Federal Trade Commission recently suggested a 7.2 million dollar fine against Home Advisor for deceptive practices. I would not be surprised if they flipped to the consumer side and addressed the unscrupulous process of obtaining those leads from the homeowner! Everything about their process is bad, except one thing; it’s a money machine. Whether they charge the homeowner, or they charge the contractor, they use every means at their disposal to get your information, bill you, and move on. (Even if those means are unscrupulous.)

From the consumer’s perspective, let’s talk about what you might inadvertently walk into when you attempt to find a remodeler for your project with Home Advisor, Angie’s List, and others;

1. As soon as you begin your Google search, right at the top of the page, will be Angie’s List and Home Advisor touting, “Top ten remodelers in your area”. They are paying Google big dollars for this position on your screen – and you will not see the “top ten” when you click on their page.

2. As soon as you click to see the “top ten”, you will be prompted – without access to any of the actual contractors – to start sharing all your information; type of project, size of project, “tell us more about your project”, until finally – they request your address and phone number!

3. What you didn’t realize until it was too late? Your information just got sold. And not to one contractor. Not to a couple of contractors. Your project information just got sold to a whole bunch of contractors, and you’re about to get schooled in the art of receiving phone calls.

4. When your phone rings the first time, you’re a little surprised because you just clicked the button. Surely, nobody could already have your information?! What you didn’t realize until it was too late? There is a well-oiled machine out there that does nothing but follow up on leads and attempt to make appointments. Their job is to call you within three minutes of your submission. Your information popped up on their screen and they’re ready to dial your number!

This is their business plan, and it works very well… for them.

Your goal – as a consumer – should be to find the remodeler that fits your project. Many times, that is the remodeler without the appointment setters and the well-oiled machine that calls you back in 3 minutes or less. The contractor that fits your needs might be hanging drywall when you clicked the button on your screen and started the onslaught of phone calls. The contractor you want might not check emails until the next morning, and by the time he/she calls, you’re about as likely to answer a number you don’t recognize as you would be to take a beating!

So, what’s the solution? I believe that as consumers, we’re becoming more and more aware of when a company is trying to push us around. I believe we have to understand the system that’s in place; on Google and in the procedures and processes that lead generating companies like Angie’s and Home Advisor follow. (They’re the same company by-the-way). We have to know the difference between a company you found on Google in an “organic search” versus finding the companies at the top of the page that are paying for that position. We have to be diligent and check referrals on recent jobs in order to get real feedback on the contractor we’re considering. We must know by now, in this day and age… in fact this is a prerequisite for surviving any remodeling process… that anyone offering a deal that’s only good for today, is using an unscrupulous sales system that cares much more about making-the-sale, than creating something beautiful and lasting in your home.

Be diligent, take your time, do your research, find someone that’ll listen and cares about you and your project!

Read More

The “Sales” process

The “Sales” process

The title; "Salesman" can have some oblique negative connotations. We all think of that...

Kitchens →

Bathrooms →

Home Remodeling →

Age Friendly →