Discount brokerage Purplebricks slapped on wrist for misleading ads

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

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
Glenn Rice with Fire Island (Getty, Giulia Menechella)
Brown Harris Stevens plants flag, but no office, on Fire Island
Brown Harris Stevens plants flag, but no office, on Fire Island
(Photo Illustration by The Real Deal with Getty Images)
“A housing recession”: Home sales fall for six straight months
“A housing recession”: Home sales fall for six straight months
Valerie Dillon and Arthur Becker with 465 Washington
After battle with Becker, gallery owner sells Tribeca pad
After battle with Becker, gallery owner sells Tribeca pad
Illustration of Loews Corporation's Jonathan Tisch and Taubman Centers’ Robert Taubman (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images)
Tisch, other Hamptons billionaires shamed by water authority
Tisch, other Hamptons billionaires shamed by water authority
Corcoran's Tim Davis with 1116 Meadow Lane (Tim Davis Hamptons)
Estate trades for $48M on Meadow Lane — $9M above ask
Estate trades for $48M on Meadow Lane — $9M above ask
Housing, Collapse
Housing starts collapse under inflation, high rates
Housing starts collapse under inflation, high rates
Blend Labs ceo Nima Ghamsari (Illustration by Kevin Cifuentes for The Real Deal with Getty Images, Blend)
Digital mortgage firm Blend loses $478M, sheds more of workforce
Digital mortgage firm Blend loses $478M, sheds more of workforce
(Illustration by Kevin Rebong for The Real Deal with Getty)
Mortgage demand drops to turn-of-the-century levels
Mortgage demand drops to turn-of-the-century levels
arrow_forward_ios

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

Loading...