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LINDON — The Federal Trade Commission and the Utah Division of Consumer Protection on Monday announced a $16.7 million settlement with Lindon-based Response Marketing LLC, which was alleged to have "used false promises" to sell real estate investment training programs.
Investigators say the agreement marks the biggest consumer settlement in the history of the Beehive State.
"This is the largest consumer protection division settlement in Utah's history and holds Response Marketing Group and its affiliates accountable for the serious financial harm to consumers across the country," Margaret Busse, executive director of the Utah Department of Commerce, said in a statement. "Utah businesses that seek to take advantage of consumers should be put on notice."
Additionally, real estate celebrities Scott Yancey from A&E's "Flipping Vegas," and Dean Graziosi, host of the popular podcast "Own Your Future," who endorsed the training, have agreed to pay a combined $1.7 million.
Under their settlements — the FTC's first monetary settlement involving celebrity endorsers — Graziosi will pay $1.25 million, and Yancey will pay $450,000.
"Yancey and Graziosi promoted the training programs and were involved in efforts to bury online customer complaints that said Response Marketing failed to deliver on its promises or was a scam," the FTC said in a press release.
A statement from the Utah Division of Consumer Protection said Response Marketing drew consumers to free events across the nation through the use of infomercials and social media advertisements from real estate celebrities such as Yancey and Graziosi.
Response Marketing would then entice consumers to buy three-day workshops for around $1,000 "by falsely representing that it would provide consumers with access to special tools that would enable them to become successful real estate investors," the division said.
The company also "deceptively pitched" other, more expensive training programs that cost tens of thousands of dollars at the workshops, according to the complaint filed by Division of Consumer Protection and the FTC.
However, Response Marketing didn't stop there, allegedly continuing to upsell consumers through the promotion of a coaching program that was pitched as being exclusive and called "Inner Circle" through telemarketing that could cost as much as an additional $30,000.
FTC suit leads to $16.7 million judgment against principals and celebrity endorsers of real estate investment training program. Court order agreed to by principals permanently bans them from selling "wealth creation" programs: https://t.co/HNdOQyeZKi
— FTC (@FTC) May 22, 2023
According to the complaint, most consumers who purchased Response Marketing's products and services did not become successful real estate investors, nor did they recoup any of the money they lost through the training programs.
"Today's order against Response Marketing and its owners permanently bans them from the wealth creation business and returns $15 million to consumers, on top of the $1.7 million already secured through this litigation," said Samuel Levine, director of the FTC's Bureau of Consumer Protection. "We are grateful to the Utah Division of Consumer Protection for their partnership in obtaining this strong relief, and we will continue cracking down on deceptive money-making opportunities and unlawful endorsement practices."
Response Marketing sold its training programs under a variety of names, including Affluence Edu, Cash Flow Edu, Flip for Life, OnWealth, Renovate to Rent and Visionary Events, according to the FTC.
The company's predecessor began selling real estate investment training packages in the early 2010s. Response Marketing agreed to stop selling these packages in December 2019 following the filing of the initial complaint in this case by the FTC and the Utah Division of Consumer Protection.
"Two of Response Marketing's affiliates — Nudge LLC and BuyPD LLC — are also part of the settlement, along with the four individuals who the complaint alleges were the actual owners of Response Marketing: Brandon B. Lewis, Ryan C. Poelman, Phillip W. Smith and Shawn L. Finnegan. Under the settlement, these three companies, the four owners and Response Marketing's president, Clint R. Sanderson, are banned from selling "wealth creation" products and services anywhere in the country," the FTC said in a statement.
"They are also required to pay $15 million, which will be used to provide redress to consumers. If these payments are not made, these parties will be liable for an additional $15 million in civil penalties that will be payable to the Utah (Division of Consumer Protection)."
