Major Caregiver Referral Site Removes Thousands of Bogus And Unverified Listings Prior To Investigation (#GotBitcoin?)
WSJ investigation had found that hundreds of day-care centers listed on its website as state licensed didn’t appear to be. Major Caregiver Referral Site Removes Thousands of Bogus And Unverified Listings Prior To Investigation (#GotBitcoin?)
The online child-care marketplace Care.com CRCM 2.01% scrubbed its site of tens of thousands of unverified day-care center listings just before a Wall Street Journal investigation published March 8, an analysis shows.
Care.com, the largest site in the U.S. for finding caregivers, removed about 72% of day-care centers, or about 46,594 businesses, listed on its site, a Journal review of the website shows. Those businesses were listed on the site as recently as March 1.
Publicly traded Care.com, with about 32 million caregiver and parent members, focuses largely on matching families with individual nannies and babysitters; parents also turn to the site to find and research day-care centers in their areas.
The day-care center listings in question were taken down from the site March 7, according to Nancy Bushkin, a Care.com spokeswoman. That was also the day of the company’s fourth-quarter earnings release.
Ms. Bushkin said the company had removed 45% of day-care centers in its database, a number that hasn’t been previously reported. She said the number is different than the Journal’s analysis because the company filters day-care center listings in its database through algorithms to “optimize the experience,” adding that the Journal saw only a subset of its total listings.
Ms. Bushkin declined to provide the current and prior total number of day-care centers on Care.com.
An earlier Journal investigation found that hundreds of day-care centers listed on Care.com as state licensed didn’t appear to be. Some of them appeared not to exist or to be aware they were on the site. The Journal’s reporting also showed the company’s limited vetting of caregivers on its site. The investigation found nine who had prior police records. The company has said it makes clear through its website and emails to customers that it doesn’t fully vet caregivers.
In addition to a monthly membership fee, the company sells screening packages to those interested in background checks.
Care.com shares dropped 13% on March 11, the first trading day after the article was published. The company in a securities filing that day also announced several changes to its business practices, including the removal of some “small and medium-sized business listings.” The stock is down about 3.5% since March 11 and closed on Friday at $19.76 a share.
In the filing, Care.com said it had used publicly available data to create directory listings for certain businesses that provide child-care services, a practice it said was common among digital platforms. It then asked those businesses to claim ownership of the listings.
Care.com, which didn’t disclose the number it had taken down, said in the filing it had removed the listings that weren’t claimed.
Most day-care centers listed on Care.com aren’t paying members; the company said day-care center listings represent less than 0.5% of its total revenue. Care.com charges members up to $39 a month to see and respond to its listings of babysitters and nannies; nonmembers can see its day-care center offerings.
The issue highlights the pressure on many internet platforms to attract customers by presenting a critical mass of listings to demonstrate scale, says Daphne Keller, director of intermediary liability at Stanford Law School’s Center for Internet and Society. She added that inactive or false listings don’t produce a good customer experience either. “You don’t want to have a bunch of listings in there that turn out to be dead ends,” Ms. Keller said. A Care.com spokeswoman declined to comment on Ms. Keller’s assessment.
Care.com, founded in 2006 by its current chief executive, Sheila Lirio Marcelo, went public in 2014 and has enjoyed several years of strong growth. Its largest stockholder is Capital G, a fund backed by Google parent Alphabet Inc.
The Journal’s March 8 article showed that Care.com performed limited vetting of caregivers and that some of the day-care centers falsely said they were state licensed. In one example, the mother of twin toddlers who drowned at a day-care center pool in Tennessee last year relied on Care.com’s day-care center listing for research. The listing said the center was state licensed, but it wasn’t.
The lawyer for that day-care operator declined to comment on the specifics of the accident. The Tennessee Department of Human Services said it believed the day-care center was operating legally on the day of the deaths, noting that a person can care for four unrelated children without a license. The day-care center had sent parents an email saying that seven children would have to be “let go” as the center pursued its licensing.
At the time, Care.com notified users in small type at the bottom of each listing that it didn’t verify day-care center listings; after the Journal’s March 8 article, it moved that warning to the top of the pages of day-care centers. It announced that change in the March 11 filing; it declined to comment on its filing.
In its securities filing, Care.com said it would no longer allow caregivers to begin applying for jobs on the site until the company had completed a “preliminary screening,” which Care.com previously told the Journal included checking multijurisdictional criminal databases and the National Sex Offender Public Website.
The company also created a new board committee to oversee the company’s safety and cybersecurity programs.
Care.com to Enhance Screening for Caregivers
Online child-care network plans in-depth background checks and lowers annual guidance.
Online child-care marketplace Care.com Inc. CRCM -6.19% said Thursday it planned to overhaul its business model to include in-depth background checks and other screening procedures for caregivers following heightened scrutiny of its vetting practices.
The largest online caregiver network in the U.S., which has about 32 million members, said it would pay a provider of background checks and identity services to conduct screening of caregivers its site, such as verifying their social security numbers and checking for criminal histories.
The company said it would display the date of its most recent check on caregivers’ profiles online. Care.com will begin implementing the screening enhancements in the next few months, it said.
The enhancements follow an investigation by The Wall Street Journal that found the company performed limited vetting of caregivers and that some of the day-care centers listed as state licensed weren’t actually licensed.
Previously, the company relied on families and others to do most of the vetting of the caregivers that they hired, and encouraged them to pay for additional background checks on those individuals. In a change announced in a securities filing after the Journal article was published, Care.com said it would no longer allow caregivers to begin applying for jobs on the site until the company had completed a “preliminary screening,” which includes checking multijurisdictional criminal databases and the National Sex Offender Public Website.
Thursday’s moves show the company further strengthening its vetting procedures.
Chief Executive and founder Sheila Marcelo said in a statement that she and the company believe “in the importance of creating a new safety standard for digital care marketplaces and today’s announcements mark a substantial step toward that goal.”
Care.com shares dropped about 3% in recent trade. The shares are down more than 35% in the past three months.
The company said it is launching a pilot program this month that would use facial recognition to match a government-issued ID. Care.com will also seek to verify the state licenses on child-care listings provided by business owners.
It appointed Clark Ervin, former inspector general of the Department of Homeland Security, to its board.
Separately, Care.com reported a first-quarter net loss of $1.03 million. The company lowered its annual guidance for earnings before interest, tax, depreciation and amortization by $8 million. Chief Financial Officer Michael Echenberg said on the company’s earnings call Thursday the weaker outlook was in light of Care.com’s one-time expenses responding to the Journal’s investigation and the safety investments the company is undertaking.
Ms. Marcelo also said that “a handful of very small clients” have decided not to renew their Care@Work services, a program that provides employees with backup child care, but the effect on revenue was small. Major Caregiver Referral Site, Major Caregiver Referral Site, Major Caregiver Referral Site, Major Caregiver Referral Site
Best Buy Co. said in April that it had suspended its Care@Work relationship.
IAC to Buy Care.com in $500 Million Cash Deal
The move is aimed at getting IAC into the family-care business.
IAC/InterActive Corp. agreed to buy Care.com Inc., the online marketplace for babysitters and other caregivers, for about $500 million in cash.
The deal comes months after a Wall Street Journal investigation earlier this year showed that Care.com provided limited vetting of its caregivers, sometimes with tragic results. The investigation led to the company overhauling its screening practices, weighed on its stock price, contributed to the chief executive resigning and prompted an activist investor to urge the company to pursue a sale.
IAC said the move is aimed at getting the company into the family-care business. It expects to close the transaction in the first quarter of 2020.
“IAC is committed to operating marketplace businesses that put safety first and understands the investments that need to be made to do so,” IAC said. The company said it doesn’t expect to record operating profit during its first year of owning Care.com.
The deal represents a 34% premium to Care.com’s stock on Oct. 25, a day before a media report on the potential sale was published, the company said Friday.
Shares of Care.com rose 13% in morning trading. The stock, which hit a high of $25.81 in March, has fallen about 22% this year. The company’s stock had quadrupled in three years as revenue surged before the Journal’s investigation. IAC shares added 1.2% to 241.22.
The companies said they plan to name IAC executive Tim Allen as Care.com’s chief executive, succeeding Sheila Lirio Marcelo. Ms. Marcelo, Care.com’s founder and chief executive, said in August that she would resign as CEO.
After Ms. Marcelo said she was leaving her post, the activist hedge fund Engine Capital LP urged Care.com to pursue a sale, saying the company is “at a crossroads.”
The Journal’s investigation in March found instances in which caregivers hired through the Care.com platform had police records and were accused of committing crimes while caring for clients, including child abuse, sexual assault and murder.
The company has taken steps to address those issues, and in May said it would overhaul its business model to include in-depth background checks and other screening procedures for caregivers.
The Waltham, Mass., company counts about 35 million families and caregivers in more than 20 countries as users of its services.
IAC, which operates media platforms Dotdash and Vimeo, on Thursday said it has agreed to fully separate dating-services provider Match Group Inc. from IAC’s remaining businesses.
Care.com to Pay $1 Million to Settle Allegations Over Misrepresented Background Checks
Online marketplace for caregivers also unlawfully enrolled customers in auto-renewal subscriptions, two district attorneys claimed.
Care.com Inc., the nation’s largest online marketplace for babysitters and other caregivers, will pay $1 million in civil penalties and restitution to settle accusations over misrepresented background checks and auto-renewed subscriptions without getting consumers’ consent.
The district attorneys of San Francisco and Marin County, Calif., alleged that Care.com falsely portrayed that its background checks included a search of the National Sex Offender Registry, which is available only to law-enforcement officials, and that its higher-priced background checks provided a more robust examination than the lower-priced ones.
“By misrepresenting their sex offender background checks, Care.com gave families a false sense of security about the stranger they were inviting into their homes. That practice will end immediately and consumers will be better off because of that,” San Francisco District Attorney Chesa Boudin said.
The district attorneys also said Care.com had unlawfully enrolled its customers in auto-renewal subscriptions without consent and without providing proper disclosures.
“We maintain that Care.com has always appropriately described the comprehensiveness of our products, including the automatically renewing nature of its subscriptions and that the background checks we have made available have always included databases of sex offender histories,” a Care.com spokesman said in an email.
Care.com said that since last year, it has introduced a required background check on its caregivers, and this includes a review of the National Sex Offender public website and criminal records.
The company could also be subject to permanent injunctions to settle a consumer suit alleging various unlawful business practices, the district attorneys said.
The settlement comes more than a year after an investigation by The Wall Street Journal found that the company performed limited vetting of its caregivers and largely left it up to families to determine whether a caregiver listed on the platform was trustworthy. The company did “preliminary screenings” of caregivers but didn’t undertake full background checks, verify credentials of caregivers or vet day-care centers listed on its site.
The company later said it would begin conducting in-depth background checks and identity verification procedures in screening caregivers in its online network.
In February, IAC/Interactive Corp. completed its acquisition of Care.com for about $500 million in cash, or $15 a share.
Care.com, which was founded in 2006, provides various services that enable families to seek care for children, seniors and pets. It is available in more than 20 countries.
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