The Federal Trade Commission today took action against an online home buying company. The FTC has accused Opendoor of using misleading and deceptive information for sellers, and in fact, most of the people who sold to Opendoor made thousands of dollars. Less If you sell your home using the traditional process. Under the proposed administrative order, Opendoor must pay $62 million and cease its deceptive practices.
“Opendoor promised to change the real estate market, but it built its business on old-fashioned deception about how much money consumers could make selling their homes on the platform,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. There is nothing new about defrauding consumers.
Headquartered in Tempe, Arizona, Opendoor operates an online real estate business that, among other things, buys homes from consumers as an alternative to consumers selling their homes on the open market. Advertised as “iBuyer,” Opendoor says it uses “market rate” offers and transaction costs to save consumers money compared to the traditional home selling process.
Opendoor’s marketing materials include charts comparing their customers’ net income from market to market for Opendoor. Those charts almost always show consumers making thousands of dollars selling to Opendoor. In fact, the complaint describes exactly the majority of consumers who have sold to Opendoor. disappeared Thousands of dollars compared to traditional marketplaces, because the company’s offerings are below average market value and the cost is higher than what consumers would normally pay.
In the agency’s investigation, it was confirmed that Opendorm violated the law by misrepresenting it.
- Estimated market value values used at an open door when making offers to purchase homes, provided those values include lower adjustments to market values;
- Opendoor made money from the stated fees, when in reality it made money by buying low and selling high;
- Consumers would pay the same amount in maintenance costs if they sold their home through Opendoor or a traditional sale. And
- Consumers were paying less to sell to Opendoor than they would have paid through traditional sales.
Opendoor agreed to a proposed order requiring the company to:
- Pay 62 million dollars The order requires Opendoor to pay $62 million to the commission, which is expected to be used for consumer reform.
- Stop misleading potential home sellers: The order prohibits Opendoor from making deceptive, false or unsubstantiated claims to users about how much money they will receive or how much they will pay to use the service.
- Stop making baseless claims. The order requires Opendoor to have competent and reliable evidence to support any representations made about the costs, savings or financial benefits and costs associated with traditional home sales.
The commission vote to accept the settlement agreement was 5-0. The FTC will soon publish a description of the settlement agreement package in the Federal Register. The agreement will be subject to public comment for 30 days, after which the commission will decide whether to make the proposed agreement final. Instructions for submitting comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.
Note: When the Commission issues a final compliance order, it carries the force of law with respect to future actions. Each violation of such order may result in civil penalties of up to $46,517.