Discount brokerage Purplebricks slapped on wrist for misleading ads

Flat-fee firm to pay $16K, change wording of ads in Australia

TRD New York /
Mar.March 12, 2018 10:00 AM

Purplebricks, the rapidly-growing flat-fee brokerage, has been slapped on the wrist by an Australian consumer agency over misleading advertising that promises “low, fixed fees.”

The U.K.-based company, which launched in the U.S. six months ago, was fined nearly $16,000 for ads deemed to be misleading to consumers. The Queensland Office of Fair Trading said the ads duped consumers who were charged to post listings even if their property didn’t sell. In the U.S., Purplebricks charges sellers a nonrefundable, upfront fee of $3,200.

The ads — with the theme “save yourself from commisery” — are a play on “commissions” and “misery.” Purplebricks was also fined in the U.K. after boasting of “fees saved.”

In response to the Australian fines, the company has adjusted the wording of its ads in a “small segment” of the market, the company said.

Purplebricks has avoided similar troubles in the U.S., where its ads say “save yourself from real misery.” (The wording is different because Purplebricks cannot eliminate the buyers’ agent commission like it can in the U.K. and Australia, where transactions only include a sell-side broker fee.)

“We can’t use that word over here because it sets up the idea in people’s minds that there’s no commission at all,” Jonathan Adler, the company’s U.S. chief marketing officer, told Inman. “It’s a different business model in the U.S. and we have to be really, really careful.”

Perhaps a bigger issue than the misleading ads, however, is that a study by research firm Jeffries said Purplebricks only sold 50 percent of the homes it listed — not the 78 percent it advertised. Purplebricks denied the claim.

Purplebricks opened a Los Angeles office last year after raising $60 million from investors. [Inman] — E.B. Solomont


Related Articles

arrow_forward_ios
HFZ Capital’s condo the XI has sold 38 of its 236 units (iStock)

HFZ’s Chelsea condo now effective, with 16% of units sold

HFZ’s Chelsea condo now effective, with 16% of units sold
Zillow's Rich Barton (iStock)

Zillow launches brokerage to boost iBuying

Zillow launches brokerage to boost iBuying
421 Broome Street (Google Maps)

Soho penthouse buy sets record despite price chop

Soho penthouse buy sets record despite price chop
Oxford Property Group CEO Adam Mahfouda and (inset) the late Bianka Yankov (Mahfouda courtesy of Propco Holdings, iStock, Linkedin)

Oxford Property Group acquires Spire, expands to nearly 800 agents

Oxford Property Group acquires Spire, expands to nearly 800 agents
Brooklyn’s Sunset Park is in the midst of a severe housing crisis and in desperate need of affordable housing. (Photo by Jim.henderson via Wikipedia)

Sunset Park faces severe affordable housing shortage: report

Sunset Park faces severe affordable housing shortage: report
209 Dean Street and 315 Adelphi Street (Google Maps)

Sprawling Brooklyn townhouses drive week’s priciest deals

Sprawling Brooklyn townhouses drive week’s priciest deals
The number of single-family homes on the market hit historic lows in July, driving prices up (iStock)

US housing supply reaches nearly 40-year low

US housing supply reaches nearly 40-year low
Gov. Andrew Cuomo with Judge Lawrence Marks and Judge Daniele Chinea (Getty, Linkedin, iStock)

Flip-flop on eviction ban extension highlights state’s chaotic response

Flip-flop on eviction ban extension highlights state’s chaotic response
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...