Amazon Home Services and Realogy

Amazon Home Services Possible Antitrust Violations

A copy of the complaint filed with the US DOJ and the US FTC asking to review practices of Amazon.

This is a copy of an official request to the United States Federal Trade Commission (US-FTC) and the United States Department of Justice (US-DOJ) to investigate Inc. and Realogy Holdings Corp. on the grounds of alleged violation of Federal Trade Commission Act of 1914, alleged violation of Sherman Antitrust Act of 1890, as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with possible market allocation, consumer allocation, and price-fixing practices.

Attn: Citizen Complaint Center, Antitrust Division
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530
Attn: Office of Policy and Coordination, Room CC-5422
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. N.W.
Washington, D.C. 20580

What are the names of companies, individuals, or organizations that are involved? Inc.
410 Terry Avenue North
Seattle, Washington 98109
(206) 266-1000
Realogy Holdings Corp.
175 Park Ave
Madison, New Jersey 07940
(973) 407-2000

How do you believe they have violated the federal antitrust laws?

Amazon Home Services allows professionals like house cleaners, handymen, electricians, and plumbers, to sell professional services to Amazon Home Services customers in their area. Trade professionals (ex. Electricians, Plumbers, General Contractors, etc.) are required to be licensed. All Amazon Home Services providers are required to carry General Liability insurance with a limit of $1,000,000 US dollars per occurrence. Amazon Home Services operates as a referral network subject to zero upfront costs, no startup fees, no subscription fees, and no advertisement fees. Professionals engaged with Amazon Home Services pay a revenue share for completed jobs based on the service type and final service price. Professionals receive job orders from customers who order pre-packaged services.

Amazon Home Services is a referral fee network that operates on a percentage of the service provider’s take-home from each job order. Consumers receive predefined, pre-packaged services with an upfront price and schedule appointment time frame with professionals who have agreed to Amazon Home Services service fees and terms. Amazon Home Services quotes are based on their estimates on a standard scope of work, and 9 out of 10 customers see no change in the final pricing. Customers have a chance to review the service details and confirm the final pricing with each professional before the work begins, but professionals do not set prices individually. Amazon Home Services is available in most major cities in the US. Direct payments from a consumer to a professional are not allowed because all service providers must pay a revenue share for completed jobs, otherwise known as a referral fee.

Amazon Home Services engages in a price-fixing scheme to solicit such services using the Internet because it unilaterally sets prices and service levels for pre-packaged services on its web site. Pre-packaged services with a defined scope (for example, TV wall mounting, bed assembly, treadmill assembly, move-in or move-out house cleaning) are subjected to 20% referral fee for the portion up to $1000 and 15% for the portion greater than $1000. Recurring services purchased as a subscription plan for recurring appointments are subject to a 15% referral fee. The fees apply to all professions, all service types, in all locations. Amazon deducts the fees as a percentage of the service price, excluding any taxes collected through Amazon tax collection services.

In the United States, simple price-fixing agreements are illegal. These antitrust regulations exist because the competitive process only works when competitors set prices honestly and independently. In the case of Amazon Home Services, the company acts as a referral network that subjects all service professionals to a hefty fee. Amazon Home Services must make up for this fee in some way, otherwise, service providers will tend to increase their price to accommodate an excessive revenue share they must allocate back into the network. The only way to avoid higher prices in this scenario is to intentionally price-fix services for service providers at lower levels. In this scheme, consumers end up paying a set price, pre-negotiated for them by the network.

In July 2019 Amazon has announced a partnership with Realogy Holdings as an expansion move into the residential real estate industry. In this partnership, Amazon steers consumers toward brokers associated with Realogy Holdings in exchange for Realogy Holdings buying $5,000 worth of Amazon Home Services benefits for each signed customer. Realogy Holdings further distributes these benefits to signed customers in place of a buyer’s commission refund. In essence, referred customers receive an equivalent of buyer’s commission refund from Realogy Holdings agents that must be spent at Amazon. This is a form of collusion and vertical market allocation scheme, where consumers end up being steered toward Realogy Holdings by Amazon, and Realogy Holdings steers consumers back to Amazon, quid pro quo. It should be noted that the buyer’s commission refunds from real estate brokers to consumers are only allowed in 40 States and Washington DC. By pre-negotiating these incentives for a set value of $5,000, both Realogy Holdings and Amazon further engage in price-fixing which limits the ability of consumers to negotiate a buyer’s refund directly with a real estate agent.

What is the product or service affected by this conduct? Where is the product manufactured or sold, or where is the service provided?

Amazon Home Services allows professionals like house cleaners, handymen, electricians, and plumbers, to sell professional services to Amazon Home Services customers in their area. Amazon further refers consumers to real estate agents.

What is your role in the situation in question?

I currently serve as a CEO HomeOpenly. HomeOpenly is an Open Real Estate Marketplace™ designed to provide home buyers and sellers with a transparent homeownership experience. The core feature of the platform allows home buyers and sellers to receive live and actionable savings from local competitive real estate agents, including listing rates, buyers refund, and flat fees. This process is free and does not tax our users with referral fees. HomeOpenly does not lock anyone into any specific rates or rebates — the competitive marketplace guides the process. HomeOpenly doesn’t fix prices, instead, we maintain the fair and open competition as the core of our platform. Our neutrality is secured by the fact that HomeOpenly is not a real estate broker, and we never intend to become one. HomeOpenly is always a technology company. HomeOpenly is seeking a fair and open competitive environment to develop our service. Successful implementation of our platform requires full enforcement of existing antitrust laws that were implemented to protect US consumers. In our future online marketplace expansion plans, I see an opportunity to develop a unified end-to-end Open Marketplace™ for all homeownership needs. Instead of subjecting consumers with a “blind match” process and referral fees, we seek to develop a platform where consumers and service providers meet openly. In this consumer-centric approach, each service provider can set their rates and service levels, as they wish. As long as price-fixing schemes such as Amazon Home Services are allowed to operate, they will ALWAYS be able to undercut our efforts by arbitrarily setting prices to lower levels for service providers in their network. HomeOpenly Open Marketplace™ is at a major disadvantage in such anti-competitive environment and suffers direct damages as a result of the price-fixing scheme established by Amazon Home Services.

Who is harmed by the alleged violations? How are they harmed?

Consumers are eventually harmed by Amazon Home Services price-fixing scheme due to an anti-competitive structure. To orchestrate a scheme, the company acts as a referring entity and collects a sizable referral fee. In the long term, such fees and anti-competitive price-fixing either result in lower service quality or higher prices. If price-fixing and market allocation in residential real estate are allowed to continue, this problem will grow into a single offer proposition where the service rates and service quality is set by a small subset of online referring networks, such as Amazon Home Services. Consumers should not be subjected to pre-negotiated buyer’s refunds, or similar incentives when buying or selling real estate. All rates and service levels in the United States must be negotiated in a competitive setting to protect an open competitive market economy from decay.

If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice

Potential violations of federal consumer protection financial laws, including RESPA, can be reported to the Office of Enforcement of the United States Consumer Financial Protection Bureau

Related to: antitrust, price fixing, real estate, Amazon Home Services, Realogy Holdings

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Last updated: November 03, 2019
First published: July 23, 2019