Opendoor is told to stop deceiving consumers about the benefits of its service. Deceiving Consumers about the supposed benefits of its service. Opendoor was lying and cheating potential home sellers by tricking them into thinking that they could make more money selling their home to them and they could make on the open market via for sale by owner, real estate agents and reputable local home buying companies.
The FTC alleged that Opendoor pitched potential sellers using false, misleading and deceptive information. Most sellers who sold to Opendoor made many thousands of dollars less than they would have made if they sold their homes using traditional means. Under a proposed FTC administrative order, Opendoor will have to pay a $62 million fine and stop its deceptive tactics; stealing from its consumers.
As Opendoor became well known it promised that it would revolutionize the real estate market. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “There is nothing innovative about cheating consumers.”
Its business used good old fashioned deception about how much home sellers could make by selling their platform. Opendoor, operates an online real estate business that buys homes directly from sellers as an alternative to selling their homes on the open market. Advertising as an “iBuyer,” Opendoor claimed it use cutting edge technology to save sellers money by providing real “market value” offers and reducing transaction costs compared with the traditional home sales process.
The marketing materials Opendoor provided its consumers included charts comparing their consumers’ net proceeds from selling to Opendoor versus the net proceeds of selling on the open market. These charts showed that consumers would make many thousands of dollars more by selling directly to Opendoor. In fact, the FTC complaint states that the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the open market. This is mainly because the company’s offers have been considerably below market value on average and its costs have been much higher than what sellers typically pay when using a real estate agent or even when selling to a local, honest home buying company.
The FTC’s complaint goes on to say that their investigation found that Opendoor also violated the law by misrepresenting that:
- Opendoor made money from disclosed fees, when in reality it made money by buying low and selling high;
- Opendoor used projected market value prices when making offers to buy homes, when in fact those prices included downward adjustments to the market values;
- consumers likely would have paid the same amount in repair costs whether they sold their home through Opendoor or in traditional sales; and
- consumers likely would have paid less in costs by selling to Opendoor than they would pay in traditional sales.
Opendoor has agreed to a proposal order that requires the company to:
- Pay $62 million: The order requires Opendoor to pay the Commission $62 million, which is expected to be used for consumer redress.
- Stop deceiving potential home sellers: The order prohibits Opendoor from making the deceptive, false, and unsubstantiated claims it made to consumers about how much money they will receive or the costs they will have to pay to use its service.
- Stop making baseless claims: The order requires 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.
The Federal Trade Commission vote to accept the consent agreement was 5-0. They will publish a description of the consent agreement package in the Federal Register soon. 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. Instructions for filing comments appear in the published notice. Once processed, comments will be posted on Regulations.gov.
Opendoor: The company Scammed regular hard working Americans that just wanted a fair shake when it was time to sell their homes. The owners and executives that run Opendoor are criminals and deserve to be in prison; not collecting high salary, bonuses and benefit packages.
Announced earlier today “Zillow and Opendoor announce multi-year partnership”, Are these companies so naïve to think for a moment that the American consumer will allow Zillow to steal from them like Opendoor did. They aren’t going to fall for this Zillow/Opendoor smoke and mirrors thing.