The Federal Trade Commission finalized a consent order against Arizona-based Opendoor Labs designed to prevent the online real estate business from deceiving consumers about how much money they could save by selling their home to Opendoor, as opposed to selling on the open market.
Advertised as an “iBuyer,” Opendoor claimed to use cutting-edge technology to save consumers money by providing “market-value” offers and reducing transaction costs compared with the traditional home sales process.
According to the FTC’s complaint, the company cheated potential homesellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process. The FTC alleged Opendoor pitched potential sellers using misleading and deceptive information, and in reality, most people who sold to Opendoor made thousands of dollars less than they would have by selling their homes using the traditional process.
The final order requires Opendoor to pay $62 million, which is expected to be used for redress of effected consumers. It also prohibits Opendoor from making the deceptive, false, and unsubstantiated claims to consumers about how much money they will receive or the costs they will have to pay to use its service.
The order also required Opendoor to have competent and reliable evidence to 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.