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Financial Services Law Insights and Observations

FTC fines company $62 million for FTC Act violations

Federal Issues Enforcement FTC Deceptive FTC Act UDAP

Federal Issues

On August 1, the FTC announced a consent order against an online home buying firm for allegedly making misleading claims. According to the complaint, the company allegedly advertised to potential sellers using misleading and deceptive information. The complaint also alleged that the company violated provisions of the FTC Act by, among other things, misrepresenting: (i) market value prices when making offers to buy homes by including downward adjustments to such values; (ii) the manner in which it made money on transactions; (iii) that consumers likely would have paid the same amount in repair costs whether they sold their home through the company or in traditional sale; and (iv) that consumers paid less in costs. The firm issued a statement regarding the FTC settlement stating that, among other things, it “strongly disagree[s] with the FTC’s allegations,” and that the FTC’s allegations “are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago.” The statement also noted that the settlement will allow the firm to “focus on helping consumers buy, sell and move with simplicity, certainty and speed.”

According to the consent order, the company is required to pay the FTC $62 million, which is expected to be used for consumer redress. The company is also prohibited from making 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. Additionally, the company is required 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.

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