I recently invested in an ad with ServiceMagic (now HomeAdvisor), a search engine similar to Angie's List. They pitch the idea that they pre-qualify the leads they send you, making sure they are serious, and ready to hire. They admit that the lead will also be sent to a few other contractors, but you have a much better shot if you contact the lead the minute they inquire. Plus, they also screen the contractors that they advertise by performing a background check and legal US citizen check which requires providing a social security number that is allegedly encrypted when entered into their system. The screening process also includes verification of insurance, licensing, and references. I passed the screening process with flying colors, and gained the "ServiceMagic Seal of Approval". I found out later on (after I had been approved) that they had not bothered to contact any of my references.
Having discussed the plan in great detail with the phone sales rep, I agreed to $30 per kitchen remodel lead, one lead maximum per month, with the option of turning off my leads when I did not want to be charged or if I was too busy to take new jobs. The first inquiry I received was an empty lead. I could not reach them by phone or email, even after several tries over the course of a week. I was not expecting a miracle, but this one incident made me uneasy, so I thought I would check outside reviews from past ServiceMagic users. I was stunned when I read what people had to say. "Scam" is a fairly extreme term, but it seemed to be a common term used in HUNDREDS of reviews. http://www.consumeraffairs.com/homeowners/servicemagic.html
Those few (and I mean FEW) that had good things to say about ServiceMagic seemed to all have the same story, using the same reasoning and phrasing. Hmmm. Based on my research, the general formula for these positive reviews was as follows:
"I have been with ServiceMagic for many years, and they have sent me tons of business. The leads they send are pre-screened, but ServiceMagic will not hand you the sale/job. You have to work for it. You have to follow up with the leads, and sell yourself to the client. Only the best of the best salespeople will benefit from ServiceMagic". ---John Doe
I personally am WELL aware of the process of selling one's self to a customer--- explaining the advantage that my company has over others. I understand the need for follow-up and have been doing that for years. However, with this empty lead, I was not given the chance to speak with the customer at all. Yet, ServiceMagic denied my request to credit me back on this particular transaction. I did not turn the internet upside down documenting millions of victims, but I did not have to read much to become very scared and concerned for my identity and my money. I will give some examples of comments that appeared over and over again in hundreds of reviews:
1. ServiceMagic's "Pre-screened & qualified leads" most often are empty leads. If a designer/contractor is unable to reach the lead issued to them, they should not be charged for it.
2. ServiceMagic has an option to credit the contractor back for these empty leads, but I was denied that. This was the excuse I GOT: "We cannot credit your account because we have no way to know why the customer is not responding to you". What??? Refusing to credit a contractor for an empty lead that for all I know is a fabricated identity is at the very least shady.
3. Many contractors attempted to close their accounts, only to find it re-activated in 30 days with an automatic charge to their credit card STILL ON FILE. Several remarked that they had to call customer service repeatedly in their attempts to cancel, and were still being charged. Some even went through the hassle of cancelling their credit card so that their card on ServiceMagic's records could no longer be charged. Wow.
4. Some contractors who were able to cancel their accounts had a very interesting report: When doing an online search for their own company, they found that ServiceMagic was still advertising their company name, but referring the customers inquiring to S.M. operators, who would then provide the customer with DIFFERENT contractors' names and contact info. This is probably the worst of all the offenses committed by ServiceMagic---charge contractors for empty leads, and then use the contractor's own name to gain business for other paying companies. That is pretty bad. See this video for one man's story: http://www.youtube.com/watch?v=VfHaZS1js1g
Having read so many horror stories, I cancelled my account (or attempted to) right after I got my first lead. I had a relatively tight budget to start with, and I did not want to repeat the situation even once. That was weeks ago, but while I was working on some new advertising for my company yesterday, I came to find that the fore-mentioned man's story was TRUE. My name and photograph appeared on ServiceMagic, along with a phone number that was not my own. They had "de-activated" my account, but had not removed me from their website. I immediately emailed them saying "I need to be removed from your system or I will take legal action". Sure enough, today I received an email back saying they had completely removed my name.
It may be true that ServiceMagic has had some success stories. However, after finding them guilty of the online accusation through my own experience, I want to issue a warning to my fellow designers and contractors: Do your homework. Before you get sweet-talked into signing with any ad company, do research and read every letter of the fine print. I had to actually look up ServiceMagic's terms and conditions on their website, and after the fact, determined what a joke their system is. I don't actually remember the phone sales rep mentioning these terms and conditions when she signed me initially. Maybe I'm forgetting... maybe I'm not. I take responsibility for myself being suckered into this scam (OK I said it-- SCAM), but I want other designers and tradespeople to learn from my mistake. Maybe its a scam, maybe not. Do your research, and draw your own conclusions.
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