The FTC Fined HomeAdvisor $7.2M Over Misleading Leads

In 2023, the Federal Trade Commission ordered HomeAdvisor to pay up to $7.2 million after finding the company had misrepresented how often its leads actually turned into paying customers. If you’ve been doing this ten years and you’re still paying for leads that go nowhere, that finding probably isn’t news to you.

Why the marketplace became the whole pipeline

You already know the mechanics. Pay somewhere between $15 and $100 or more per lead. It gets shared with three or four other contractors, and whoever calls back first wins the job. Everyone else paid for nothing. Contractors have been saying this on trade forums for years. One longtime electrician described these leads as people “just fishing,” rarely ready to hire anyone.

Try this: pull out your phone right now and search your own trade and city, the way a homeowner would. See where you land. A lot of contractor sites were built once, years ago, and never touched again. That makes sense. Nobody has time to babysit a website while running a crew. But if your site isn’t showing up for that search, or if it doesn’t say anything a homeowner would want to know before calling, that’s the gap the lead spend has been covering.

What the FTC found

The FTC’s complaint covered more than one issue, including false claims that leads would match a contractor’s trade and location, and a software subscription marketed as free that wasn’t. The bigger finding: the company misrepresented how often those leads turned into paying jobs.

The San Francisco DA separately settled for $6.82 million that year, over misleading claims about background checks on listed contractors.

Closing the gap

None of this makes the platforms useless as a supplement. The trouble is when they become the whole pipeline because nothing else is pulling weight. A site built to do the job works the same at 2am on a Sunday as it does at 9am on a Tuesday, and you pay for it once, to build it right, instead of paying every time it does its job.

That’s the kind of infrastructure work I do for contractors around the Twin Cities. If the search you just ran didn’t turn up much, it might be worth a second look.