FTC Accuses Handy of Misleading Ads and Hidden Fees

FTC and New York Attorney General Accuse Handy of Misleading Earnings Claims

The Federal Trade Commission (FTC) and the Attorney General of New York have filed charges against Handy, a popular gig economy application used for booking home service professionals. The accusations center around allegedly deceptive statements concerning potential earnings for workers utilizing the platform.

Details of the Allegations

A complaint submitted on Tuesday to the U.S. District Court for the Southern District of New York asserts that Handy, a subsidiary of Angi (previously known as Angie’s List), promoted earnings figures that were not representative of the experiences of the majority of its workforce. Furthermore, the complaint alleges a failure to transparently disclose associated fees and penalties, resulting in substantial deductions from worker compensation.

Handy has reached a settlement agreement, though without formally acknowledging any wrongdoing.

FTC Director's Statement

Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, stated that “[Handy] employed exaggerated and inaccurate earnings projections to attract workers to its platform.” He further explained that the company subsequently imposed inadequately revealed fines and fees, diminishing workers’ wages.

Concerns Regarding Payout Speed and Transparency

Handy advertised the availability of immediate payments for completed jobs. However, the advertising materials did not clarify that accessing these faster payouts required workers to incur a fee – and, in certain instances, complete an additional assignment. Standard payout timelines are approximately one week.

Misleading Earnings Expectations

The FTC and the New York Attorney General contend that Handy established unrealistic expectations regarding potential earnings. In states like New York, New Jersey, and California, advertisements highlighted earning potential only attainable by workers in the highest pay tier, a level requiring the fulfillment of stringent criteria. In other markets, the app promoted hourly rates of up to $45 for handyman and furniture assembly services, despite the fact that over 90% of platform workers earned less.

Opaque Fines and Systemic Issues

Moreover, Handy reportedly levied numerous, unclear fines against workers, including penalties resulting from circumstances beyond their control. A system error within Handy’s platform led to jobs not being correctly canceled, resulting in $50 fines for thousands of workers. Avoiding these fines necessitated actions such as granting GPS access to the Handy application and remaining at a job site for over 30 minutes.

Impact on Gig Workers

Such fees can disproportionately affect gig workers who depend on platforms like Handy as their primary income source. A 2022 survey conducted by the Economic Policy Institute revealed that 14% of gig workers earned below the federal minimum wage. One in five reported experiencing food insecurity, and nearly one-third were unable to cover their full utility bills.

Handy's Awareness of Worker Financial Status

According to an FTC press release, Handy has acknowledged that a significant portion of its workforce relies on public assistance programs or resides in public housing.

Settlement Terms

The proposed settlement between the FTC, the New York Attorney General, and Handy involves a payment of $2.95 million to reimburse workers affected by the platform’s practices. Handy is also required to substantiate any future claims regarding potential worker earnings and provide clear information about avoiding fees.

Handy's Response

In a public statement, Handy indicated its agreement to the settlement terms. A spokesperson communicated to TechCrunch that, “Though we were prepared to litigate, we chose to enter into an agreement with these parties to put this matter to rest and get back to putting our 100% focus on supporting our customers: the small businesses who help Americans care for and maintain their homes.” The spokesperson also asserted that the allegations were unfounded and that the settlement should not be interpreted as validation of those claims.