Angie's List Sued for Fraud in Federal Court in Philadelphia

By KYW community affairs reporter Cherri Gregg

PHILADELPHIA (CBS) - A Pennsylvania woman is lead plaintiff in a federal class-action lawsuit filed this month in Philadelphia against "Angie's List," a website that says it provides members with customer-driven reviews.

But the woman claims the Indiana-based company is a fraud.

Boasting more than three million paid members, Angie's List is known for its reputation of providing unbiased customer reviews about service providers, ranging from plumbers to pulmonologists.

"In reality, what they do is based primarily on money received from vendors," says Ken Grunfeld, an attorney with the Philadelphia law firm of Golomb Legal. The firm is representing plaintiff Janell Moore, who claims she joined "Angie's List" in 2012 and used the web site to search for a contractor.
She chose a company with no reviews. However, when that contractor ripped her off and she gave a negative review, she later learn that other "Angie's List" members had posted negative experiences.

"What we learned is that this particular contractor pays Angie's List to be pushed up on Angie's List ratings and to have other negative reviews suppressed," says Grunfeld. "They (Angie's List) hold themselves out as being a company for the people, but what they do is make their ratings and rankings based on whether or not venders, i.e., service providers, advertise."

The complaint claims that service providers pay Angie's List fees for higher rankings in member searches, to suppress negative reviews, and to ensure that positive reviews are not suppressed.

"It's important that web sites tell us who they are and what they are doing when we seek information from them," says Grunfeld, noting that web sites such as "Yelp" do not promote themselves as consumer-driven, so consumers know the reviews could come from anywhere.

The suit seeks damages based on fraud, unjust enrichment, and other claims.

Angie's List makes two-thirds of its revenue from service providers, according to the company's investor relations department. A company spokesperson responded in an e-mail that Angie's List's policy is not to comment on matters of litigation.