PHOENIX — Opendoor will soon pay $62 million dollars after the Federal Trade Commission says the company misled customers for years.
The FTC says Opendoor, which is headquartered in San Francisco and has a regional office in Tempe, cheated potential home sellers by tricking them into believing they would make more money selling to Opendoor than on the open market.
"What happened here is we have a company was telling people they were going to make more money selling it to it when that wasn’t the case," said Matthew Wilshire, attorney for the Federal Trade Commission.
In reality, most Opendoor customers lost thousands of dollars to Opendoor and typically paid more in fees and other related costs, when compared with a traditional process.
"One, They made claims to consumers about the financial benefits of their products that they didn’t have evidence for, and two, they told consumers things they knew were untrue," Wilshire said.
According to the complaint, Opendoor would include charts comparing what a seller would make from Opendoor versus the traditional market. However, those charts usually showed would-be sellers that they would make more selling to Opendoor.
"The company didn’t have the data to back that up. Instead, the data they did have, projected customers actually lost money selling to Opendoor,” Wilshire said.
According to the complaint, Opendoor repeatedly posted the company offered fair market value deals for homes, even when that was not the case.
"We uncovered evidence showing that Opendoor's intention was to offer what they believed was below market value," Wilshire said.
The FTC also says Opendoor would overcharge sellers for repair costs.
"And the consumers would not get a refund for that amount. That just became money in Opendoor’s bottom line," Wilshire added.
In a statement, Opendoor says they "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. Importantly, 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."
On Opendoor's home page, they still advertise they provide a "Competitive Cash Offer." In the FAQ section, Opendoor claims, "Unlike flippers or other buy-low, sell-high investors, our business model is fee-based. We use recent, comparable home sales to make a competitive offer on your home."
The agreement should receive final approval in the next few weeks.
Under the FTC order, Opendoor must pay $62 million to impacted customers. Wilshire says once the agreement is approved, the FTC will look through Opendoor's records and send the money to those affected.
Under the order, Opendoor must stop deceiving customers and making baseless claims. Each further violation could result in a fine of more than $40,000.
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