The End Of Angie's List

Angie’s List cannot stop getting sued by consumers who allege shoddy business practices. Popular with window cleaners in The USA & Canada, it seems like the bubble has finally burst.

Angie’s List Haunted By Huge Fraud Lawsuit As It Criticizes Indiana Religious Freedom Act: Angie’s List, an Indianapolis-based consumer reviews website, has been among the most strident critics of Indiana’s Religious Freedom Restoration Act, which allows individuals and business owners to challenge laws they believe impose heavy burdens on their religious freedom.

Indiana Gov. Mike Pence, a Republican, signed the new legislation Thursday, hailing it as a triumph for “religious liberty,” CNN Money reports. By Saturday, Angie’s List CEO Bill Oesterle said the company may cancel an expansion of its Indianapolis headquarters in light of the new law. “Angie’s List is open to all and discriminates against none and we are hugely disappointed in what this bill represents,” Oesterle said, according to The Indianapolis Star.

“We are putting the ‘Ford Building Project’ on hold until we fully understand the implications of the freedom restoration act on our employees, both current and future,” the CEO of the quaintly-named, $315 million company also said. The now-endangered “Ford Building Project” involves the conversion of a century-old Ford assembly plant into office space. To sweeten the deal, Indianapolis city officials have been prepared to give Angie’s List, a publicly-traded company, $18.5 million in tax-related incentives. The building conversion had been scheduled to begin in the next few days.

Meanwhile, Angie’s List cannot stop getting sued by consumers who allege shoddy business practices. A class action lawsuit filed on March 11 marks the third in four years for the company, which charges consumers to use it and which holds itself out as a trustworthy arbiter of consumer opinion. According to the lawsuit, however, Angie’s List is little more than a sophisticated racketeering operation that favors businesses that pay for advertising by making those businesses more visible and by quashing negative reviews of businesses which pony up for ads.

“Angie’s List does not help members find the ‘best’ service provider, but rather the one who paid the most money to Angie’s List,” the complaint claims, according to the Star. The primary plaintiff in the class action lawsuit is Janell Moore, a resident of Pennsylvania and an Angie’s List member since 2012. Moore claims that she relied on Angie’s List to select a contractor to remodel her home. That contractor failed to finish the work and did not refund Moore’s $4,000 deposit, the complaint alleges.

When Moore tried to write a scathing review of the contractor on Angie’s List, she claims, an Angie’s List employee informed her that other subscribers had also written negative reviews. However, those reviews were scrubbed from the consumer-reviews website.

While Angie’s List holds itself out as a consumer-driven company, in fact the company depends overwhelmingly on advertising for its $315 million in revenue. In 2014, for example, Angie’s List raked in $241.9 million from service providers and just $73.1 million from paid subscribers.

The lawsuit filed in March seeks unspecified damages for fraud and unjust enrichment, among other causes of action, notes CBS Philadelphia. John Banzhaf, a renowned public interest law professor at George Washington University, notes that a federal religious liberty law similar to the new Indiana law has been on the books since 1993 when President Bill Clinton signed it, and when the U.S. Senate passed it 97-3. Over 30 states already have similar laws.

Ain't It Time To Say Goodbye To Angie's List? Customer review website Angie's List ANGI +0.76% (ANGI) is playing investors, and even its own customers, for fools. Angie’s List charges members for a service that sites like Yelp YELP +1% (YELP) and the Better Business Bureau offer for free.

If ANGI can’t provide more accurate and impartial ratings, consumers have no reason to pay for their service. I am not sure that consumers will use ANGI’s ratings at all in the not-too-distant future. I am convinced the stock price implies usage and payment for usage that is far from realistic.

Reviews or Advertisements? Angie’s List refers to itself as a “consumer-driven organization”, but a quick look at its revenue breakdown reveals that is far from the truth. In 2012, 69% of ANGI’s revenue came from advertisers. Figure 1 shows how advertisers have steadily become more important, and consumers less important, to ANGI’s business.

The company can try to claim that these advertisers don’t have any say in reviews, but there is quite a bit of evidence to the contrary. The NBC affiliate channel 12 in Richmond, Va., did a little digging into Angie’s List and found that lower rated companies can bump themselves up to the top of search results by paying extra money. In one case, the top rated heating & air company showed up 12th on a list of search results because they wouldn’t pay the $12,000 to $15,000 required to move up the list.

Customers are taking notice of these misleading practices. For a company that offers customer reviews, ANGI has plenty of bad reviews of its own. A small sample of these bad reviews can be found here, here, and here. Even service providers have issues with ANGI. With all these complaints, it’s hard to see how ANGI can keep convincing consumers to pay for a service they can get elsewhere for free.

Angie's List: Doomed? (by Anthony Rodio): Angie's List began trading this week with a market cap of $800 million. Personally, I find this hard to believe and unsustainable. Don’t get me wrong: I am happy for the fine people in Indianapolis at Angie’s List. My opinion that the valuation is overly generous does not come from the fact that Angie’s List has been around for 16 years and has yet to make a profit. Or the fact that their loss doubled in 2011 compared to 2010. Or even that Angie’s List’s customer acquisition costs remain well north of industry benchmarks, though those three facts certainly are worthy of some reflection.

My opinion is driven by a conviction that Angie’s List is built on an antiquated business model. Lists are dying; it is really that simple. Web sites like Angie’s List and Yelp have evolved the Yellow Pages model by including reviews, limited price information and maps. However, consumers simply do not want evolution — they want revolution. Consumers want to be freed from the tyranny of lists. Consumers are tired: tired of searching through the “list” to locate well-reviewed providers (only to find out they are not available when they contact them); tired of not having any price transparency until the provider is in their home or they are in the provider’s office; tired of spending hours trying to find a provider and feeling ripped off when they finally do.

Popular with window cleaners in The USA & Canada, it seems like the bubble has burst.

Philly Woman Sues Angie’s List, Calls Service “Fraudulent,” “Deceptive” - The whole point of the popular website Angie’s List is that it is supposed to provide ratings and reviews of contractors, mechanics, dentists and the like based purely on customer experience, referring to itself in the company membership agreement as a “passive conduit.” But according to one Philadelphia woman, Angie’s List is anything but.

Janell Moore has filed a class action suit in Philadelphia’s federal court alleging that Angie’s List manipulates ratings to favor its advertising revenue, calling the company’s practices “fraudulent, deceptive and misleading.” Indeed, the Angie's List Frequently Asked Questions page clearly states: "Companies with the best ratings from members will appear first."

But Moore says that's simply untrue. "Angie's List secretly alters the order in which service providers are listed in members' search results," she claims in the suit. "Angie's List ranks service providers based on how much providers pay in 'advertising' fees … A plumber with an 'A' rating and all positive reviews … who did not pay any 'advertising' fees will be ranked below a plumber who did pay 'advertising' fees but has worse reviews or ratings."

Moore cites, among other evidence to support her claim, a 2013 investigative report by an NBC station in Virginia, which found that companies can boost their position in search results on Angie's List by paying Angie's List fees.

According to that investigation, one contractor that came up 12th in the relevant search was actually the top-rated contractor in the given category, and the contractor told NBC that Angie's List wanted more than $10,000 to bump him higher.

In the last quarter of 2014, Angie's List posted membership revenue of $18 million, while the company's advertising revenue had skyrocketed to $58 million, up nearly 30 percent since the year before.

In the lawsuit, Moore explains that she first had concerns over Angie's List after she had a problem with an Angie's List-recommended contractor last year. Moore says that she paid the contractor $4,000 to remodel her kitchen but that he never finished the job and refused to return the money.

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Moore submitted a negative review of the contractor to Angie's List and maintains that it was only after doing so that she was permitted to see other negative reviews of the same contractor. She says she never would have hired him had she been given access to those bad reviews, and Moore's attorneys say that those negative reviews were suppressed because the contractor had paid money to Angie's List.

Moore accuses Angie's List of breach of contract, fraud and unjust enrichment and of breaking Pennsylvania's Unfair Trade Practices and Consumer Protection Law. She is seeking unspecified damages on behalf of her and the entire class, which is pretty much anyone who uses Angie's List.

An Angie's List spokesperson has said that the company does not comment on active litigation, and the company has yet to file a response in the case.

It's not the first time that a Philadelphian has sued Angie's List. In 2013, Philadelphia resident Marie Fritzinger filed her own federal class-action lawsuit against the company over its membership fees, claiming that she (and the millions of other people in the class) were overcharged when it came time to renew. In 2014, the company reportedly settled the case for nearly $3 million.