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- Opendoor officials said the company corrected issues that were in play from 2017 to 2019.
The Federal Trade Commission has proposed a $62 million fine for Opendoor Labs Inc. for misrepresenting its ability to save potential home sellers on how much profit they could realize from using the on-line home-buying concern.
“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,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “There is nothing innovative about cheating consumers.”
According to the FTC, Opendoor’s marketing materials included charts comparing their consumers’ net proceeds from selling to Opendoor versus on the market. Those charts, the FTC said, almost always showed that consumers would make thousands of dollars more by selling to Opendoor.
According to the complaint, the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the traditional market, because the company’s offers were below market value on average and its costs were higher than what consumers typically pay when using a traditional realtor.
As part of the settlement, the FTC said Opendoor had agreed to:
- Pay $62 million, which is expected to be used to reimburse consumers;
- Stop deceiving potential home sellers; and
- Stop making baseless claims, and 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.
The commission vote to accept the consent agreement was unanimous, 5-0. It is subject to public comment for 30 days, after which the commission will decide whether to make the proposed order final.
Opendoor issued a statement about the settlement, saying that since the company’s founding in 2014 it had set out to “drastically simplify the real estate transaction, redefine the housing market, and make buying and selling a home as easy as a tap of a button — bringing transparency, competition, and convenience to the antiquated and offline home transaction for consumers.”
Officials said that, “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.”
The company added that the allegations raised by the FTC are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago.
“We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience,” officials said.
When the commission issues a final consent order, each future violation of such an order may result in a civil penalty of up to $46,517, officials said.