Angie’s List Based on Advertising Fees, Not Reviews Says Class Action

A Kansas business has hit Angie’s List with a class action lawsuit alleging that the company ranks local businesses based on the advertising fees they pay, but tells consumers that the rankings are based on customer reviews.

Angie’s List is an online business directory that allows users to read and publish crowd-sourced reviews of local businesses and contractors.

Plaintiff Steve Strauss, owner of Classic Tree Care, accuses the website of false advertising and deceptive business practices.

“Angie’s List ranks service providers higher than their competitors based on how much they pay it in advertising and referral fees, such that a service provider who qualifies for an ‘A’ rating and has uniformly positive consumer reviews but who did not pay any ‘advertising’ or other fees to Angie’s List will and would be ranked lower than a service provider who did pay such fees to Angie’s List but has demonstrably less favorable reviews, ratings and consumer endorsements,” alleges the Angie’s List class action lawsuit.

Strauss alleges in his Angie’s List class action lawsuit that the online review company says that it collects reviews from customers of local businesses and then ranks them; however, a business’ ranking is not based on reviews, alleges the plaintiff, but on the advertising the business buys from Angie’s List.

The plaintiff alleges that Angie’s List required him to both pay for advertising and use revenue sharing coupons to maintain his place on this list. Initially the plaintiff agreed, but when he found the coupons were taking too big of a bite out of his revenue – including a discount to customers and 25-percent revenue sharing with Angie’s List leading to $200,000 – he had second thoughts.

The plaintiff says that when he decided to stop using revenue sharing coupons with Angie’s List, the local representative was instructed to stop promoting his business. The plaintiff alleges that Angie’s List also recruited two of his competitors and moved his business down the list.

Further, alleges the Angie’s List class action lawsuit, the plaintiff’s business was falsely labeled as having failed a criminal background check and having “no ratings or reviews.” The plaintiff contends that his business did not fail a background check and has reviews.

“Based on its many positive consumer reviews and endorsements as received over the years, Classic Tree was unjustifiably placed low on the list of providers in an effort to suppress price competition and otherwise to ‘punish’ Classic Tree,” alleges the Angie’s List class action lawsuit.

“Despite what Angie’s List claims in its membership agreement, it is not acting or no longer acts as a passive conduit for consumers. Instead, Angie’s List actively pursues advertising and revenue sharing/referral commissions from service providers. In return, Angie’s List inflates the search result rankings of those service providers who pay advertising fees,” the complaint continues.

According to the plaintiff, Angie’s List deceives consumers into believing that its list is based on reviews and not advertising.

The plaintiff is seeking to represent other businesses harmed by Angie’s List’s deceptive marketing. The plaintiff is asking a court for damages and an order stopping Angie’s List from its deceptive marketing scheme.

The Angie’s List Class Action Lawsuit is Steve Strauss d/b/a Class Tree Care v. Angie’s List, Inc., Case No. 17-cv-02560, U.S. District Court for the District of Kansas.

California law prohibits companies from engaging in false advertising or deceptive business practices. If you believe a company is violating consumer false advertising law, you may have a legal claim. Fill out the form on this page now for a FREE case evaluation.