By Sam Boughedda
The Federal Trade Commission announced Monday that online home buying firm Opendoor (NASDAQ:OPEN) will have to pay $62 million "for cheating potential home sellers."
According to the FTC statement, Opendoor allegedly tricked potential home sellers into believing they could make more money selling their home to Opendoor than on the open market. They claim Opendoor "pitched potential sellers using misleading and deceptive information," which included charts comparing consumers' net proceeds selling to Opendoor versus on the market. However, it is said that "most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process."
Opendoor advertised itself as an iBuyer, which is a company that uses technology to make an offer on your home instantly.
"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," stated Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "There is nothing innovative about cheating consumers."
Following the news, Opendoor released a statement, saying 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," the company stated. "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."
Opendoor shares are down 3.6% Monday.