Opendoor to pay $62M in fines for cheating and misleading home sellers
Aug 12, 2022, 12:01 PM | Updated: 12:07 pm
PHOENIX – Online homebuyer Opendoor agreed to pay $62 million to settle claims of misleading and cheating customers, the Federal Trade Commission said.
The company, which operates a regional hub in Tempe, duped clients into selling their homes to the online homebuyer for less than they’d have made on the open market, the FTC said in the complaint.
“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a recent press release.
“There is nothing innovative about cheating consumers.”
San-Francisco-based Opendoor, along with similar companies, uses algorithms to determine a home’s value and then buys with cash.
The federal agency said customers were shown charts and other marketing materials that indicated they’d get thousands of dollars more with Opendoor.
Instead, the FTC said, “Consumers likely would have paid less in costs by selling to Opendoor than they would pay in traditional sales.”
The iBuyer also told customers it made money from disclosed fees when it actually made money by buying low and selling high, the FTC said.
“While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed,” representatives for the digital platform said in a press release.
The FTC is expected to disburse the money among customers after the deal is completed.
The consent agreement proposal also bans Opendoor from future deception of potential home sellers and requires reliable evidence to support “support any representations made about the costs, savings, or financial benefits associated with using its service, and any claims about the costs associated with traditional home sales.”