What the FTC's HomeAdvisor Case Tells You About Buying Leads

"Are those leads even real?" It is a fair question after a month of paying for names that never answered. In 2022 the Federal Trade Commission asked a version of the same question about HomeAdvisor, a company that sold home improvement project leads to contractors, and the way that case ended is useful to anyone who buys leads from anyone.

This is what the FTC alleged about HomeAdvisor, what the order that ended the case says, and how to turn both into a short set of questions and a log you can keep on any lead source.

What the FTC alleged

On March 11, 2022, the FTC issued an administrative complaint against HomeAdvisor, Inc. (the FTC said it also does business as Angi Leads and HomeAdvisor Powered by Angi). The FTC alleged that since at least mid-2014 HomeAdvisor had made false, misleading or unsubstantiated claims about the quality and source of the leads it sold to service providers. The FTC's announcement said the complaint charged that:

• Intent to hire. HomeAdvisor said its leads concern consumers who intend to hire a service provider soon, but "many of them do not."
• Matching. It said service providers would receive only leads matching the services they provide and their preferred area, but many did not.
• Source. It said its leads came from consumers who knowingly sought HomeAdvisor's help choosing a provider, "while many of the leads it sells are actually purchased from affiliates and did not come from HomeAdvisor's website."
• Conversion rates. It told providers its leads turned into jobs at rates higher than its own data supported.
• "Free" software. Its sales agents said the first month of an optional mHelpDesk subscription was free with an annual membership; the FTC said it was not.

An administrative complaint is not a verdict. The FTC says it issues one when it has "reason to believe" that the law has been or is being violated, and that it marks the beginning of a proceeding in which the allegations are tried before an administrative law judge. The FTC's analysis of the later order names the law the complaint relied on: Section 5(a) of the FTC Act.

How the case ended

HomeAdvisor agreed to a consent order, announced on January 23, 2023, and the Commission approved the final order on April 21, 2023. According to the FTC:

• Money. HomeAdvisor was to pay up to $7.2 million for redress, with an initial payment of $4,448,000. One fund paid up to $30 to each service provider identified as affected by the lead claims; a second paid up to $59.99 to those affected by the mHelpDesk claim who filed a claim.
• What it may not say. The order bars HomeAdvisor from misrepresenting that its leads concern people who intend to hire soon, that they match a provider's chosen task types and locations, or that the person submitted a request directly to HomeAdvisor, and from calling something free when it is not.
• Conversion claims need data. Any claim about how often its leads turn into paying jobs must be non-misleading and supported by data or written material HomeAdvisor has when it makes the claim.
• How long. The order remains in effect for 20 years, with certain exceptions.

In November 2023 the FTC announced it was sending more than $3 million in refunds, by 110,372 checks, to businesses that had paid for HomeAdvisor memberships. Under the order, those lead-quality payments were capped at $30 each, which is its own lesson: if you are being sold bad leads, a settlement years later may not make you whole. Your own records this month will do more.

The questions to ask any lead seller

The order is a list of the claims that mattered. Turn each one into a question, and ask it of every service before you sign, whoever it is:

1. Where does a lead come from? Did the homeowner fill in a request on your own site or app, or do you also buy leads from other sites? What share comes from each?
2. What does the homeowner think happens next? Did they ask for quotes, and do they know their details are going to me?
3. How many other pros get the same lead?
4. What happens when a lead is for work I do not do, or outside my area? How do I claim a credit, how long do I have, and does the credit come back as money or as credit toward more leads?
5. Do I pay for leads I never open or answer?
6. If you quote a rate at which leads turn into jobs, what is it based on? Which trades, which areas, what period?
7. What in the package is "free," for how long, and what does it cost after? Does anything renew on its own?

Get the answers in writing, in an email or the service's own help pages. Four services' current rules on several of these are side by side in lead services compared.

Measure lead quality yourself

No seller's numbers beat your own. Keep one line per lead in a spreadsheet, from every source, for at least a season:

From those columns, five numbers for each source tell you what you are actually buying:

• Match rate: leads that fit your work and area, divided by all leads. Low means the "matching" promise is not holding.
• Reach rate: leads you had a real conversation with. Low can mean bad contact data, or it can mean you answered too slowly; the log will show which.
• Knew-they-asked rate: homeowners who say they asked for quotes. A lot of "unsure" answers points at the issue behind the FTC's source allegation: leads from people who did not knowingly ask that seller for help.
• Win rate: jobs won, divided by leads.
• Cost per won job: total spent, minus credits, divided by jobs won.

Say a roofer's log shows one source with most leads matching and most homeowners saying they asked for quotes, and another where half the names never pick up and the rest are surprised to hear from him. He does not need anyone's conversion claim. The log already told him where the money should go. Claim every credit the log shows you are owed, inside each service's deadline; a credit you never request is money you chose to leave.

If you believe a lead seller misled you, keep the sales emails and your log, use the seller's dispute process first, and know that the FTC's small business page links to ReportFraud.ftc.gov for reporting scams. Nothing here predicts what the FTC, a court or any seller would do with your complaint.

General information, not legal or tax advice. Rules change and vary by state; check with the agency named above or a professional for your situation.