Opendoor makes $39M deal to settle lawsuit over pricing tech
Plaintiffs accused the iBuyer of misrepresenting its AI-powered system and relying on human processes that put it at risk. Opendoor has denied wrongdoing.
Opendoor has agreed to a $39 million settlement in a lawsuit accusing the company of misleading investors about the strength of its proprietary pricing tech — a system the iBuyer has long touted as central to its homebuying and selling model.
The preliminary deal, first reported by Reuters, is subject to approval by a federal judge.
How we got here: The lawsuit was filed in 2022 and claims Opendoor misrepresented its pricing algorithm as a powerful AI-based system that allowed it to outperform traditional real estate firms. In reality, according to the plaintiffs, the company relied on a more manual, human-driven process that left it just as vulnerable to market volatility as any other business.
When housing conditions shifted dramatically during the market cooldown, the limitations of its pricing approach became clear, the suit contends.
What Opendoor had to say: The company has denied any wrongdoing. In court filings, Opendoor said it chose to settle in order to avoid the cost and uncertainty of prolonged litigation.
Opendoor recently laid off 40 employees and is planning a reverse stock split in its efforts to stave off delisting from the NASDAQ.
What the plaintiffs had to say: In a June 13 filing, plaintiffs called the settlement a "prompt and substantial tangible recovery."