Opendoor fined $62 million

Opendoor released the following statement on the allegations:

“Since our inception in 2014, Opendoor has set out to dramatically simplify the real estate transaction, redefine the housing market, and make buying and selling a home as easy as the press of a button – bringing transparency, competition and convenience to outdated and offline people. home transaction for consumers. And the data shows that our customers love and embrace Opendoor; in fact, we maintain an NPS well above 80 and have maintained actual seller conversion of over 35% While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the issue and focus on helping consumers buy, sell and move with ease. , certainty and speed.

“It is important to note that the allegations raised by the FTC relate to activities that occurred between 2017 and 2019 and target marketing messages that the company changed years ago. We are happy to put this issue behind us and look forward to continuing to provide consumers with a modern real estate experience. »

Samuel Levine, director of the FTC’s Consumer Protection Bureau, said Opendoor promised ‘to revolutionize the real estate market, but built its business using an old-fashioned deception about how much consumers could earn. by selling their house on the platform”.

“There’s nothing innovative about misleading consumers,” Levine added.

The FTC found that Opendoor incorrectly stated that consumers would likely pay the same for repair costs whether they sold their home through Opendoor or on the open market, and that consumers would likely pay less in selling costs. with the company.

He also incorrectly said that Opendoor projected market values ​​to determine its offers for the home when in fact those values ​​included downward adjustments, the FTC reported. The company also claimed it made money from “disclosed fees” when its real source of income came from “buying low and selling high,” according to the FTC.

An example of the deceptive practices alleged by the FTC occurred around August 2018, when the company instituted a Politics of decrease offers at cover repairs to be planned.

“Politics has reduced offers without disclosing that they were less than market value,” officials said in the complaint. “If the actual repairs assessed were less than the amount withheld, Opendoor restrained the difference as income.

“Before even implementing this policy, Opendoor would reduce certain offers to accommodate potential repairs, which provided both a submarket offer and hid the assessed costs from consumers.

It’s unclear if specific racial, ethnic and socio-economic groups were targeted as part of the company’s alleged deception, but Daily Kos submitted a Freedom of Information Act request to the FTC for demographics of those allegedly harmed.

To address the alleged deception, the FTC proposed that Opendoor “stop misleading potential home sellers” and “stop making baseless claims.”

The proposed actions described in the agreement, however, are not final. “The agreement will be subject to public comment for 30 days, after which the Commission will decide whether to make the proposed consent order final,” the FTC said.


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