The Federal Trade Commission or FTC has fined $62 million to online home buying firm Opendoor Labs Inc. for allegedly cheating potential home sellers. Under a proposed administrative order, the company is also asked to stop its deceptive tactics.
Tempe, Arizona -based Opendoor, which advertises as an “iBuyer, operates an online real estate business. Among other things, it buys homes directly from consumers as an alternative to consumers selling their homes on the open market.
The FTC alleged that the company tricked potential home sellers into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process.
Opendoor is accused to have pitched potential sellers using misleading marketing materials and deceptive information. It used charts comparing their consumers’ net proceeds from selling to Opendoor versus on the market. Those charts almost always showed that consumers would make thousands of dollars more by selling to Opendoor.
But in reality, the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the traditional market, the agency noted. The company’s offers have been below market value on average and its costs have been higher than what consumers typically pay when using a traditional realtor.
Opendoor has now agreed to a proposed order that requires the company to make the payment, which will be used for consumer redress.
The order prohibits Opendoor from making the deceptive, false, and unsubstantiated claims about how much money consumers will receive or the costs they will have to pay to use its service.
The Commission’s agreement will be subject to public comment for 30 days, after which it will decide whether to make the proposed consent order final.
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