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SALT LAKE CITY — The Federal Trade Commission announced Thursday it will begin issuing $16.7 million in refunds to thousands of customers who bought into a celebrity real estate investment training scheme, after a lawsuit filed by the Utah Attorney General's Office was settled last May.
"This is the largest consumer protection division settlement in Utah's history," said Margaret Busse, executive director of the Utah Department of Commerce.
According to the complaint, Utah-based Response Marketing and its affiliates Nudge and BuyPD falsely sold consumers a series of expensive real estate investment training programs.
"These defendants presided over a sales process that started with empty promises of future wealth and ended with many consumers left in financial ruin," said Andrew Smith, director of the FTC's Bureau of Consumer Protection.
The scheme started with real estate television celebrities — Scott Yancey from A&E's "Flipping Vegas," Doug Clark from Spike TV's "Flip Men," Drew Levin and Danny Perkins from HGTV's "Renovate to Rent," and Josh Altman from Bravo's "Million Dollar Listing Los Angeles" — advertising free 90-minute seminars promising insider tips on how to make money in real estate, according to court documents.
The lawsuit said the free seminars were really just long sales pitches for a three-day, $1,100 workshop teaching a "system" for finding "lucrative" deals.
The three-day workshops, according to the complaint, ended up teaching some general information about real estate investing, while using the time as a sales pitch for "advanced training" that costs as much as $40,000.
An FTC survey filed as court evidence claims more than 95% of these consumers paid more to the company than they earned in subsequent real estate transactions.
Utah real estate training company, endorsers ordered to pay $16.7M in false claims lawsuit
Lindon-based Response Marketing has been ordered to pay a $16.7 million settlement after being accused of using "false promises" to sell real estate investment training programs.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.
Its affiliate, Nudge, began selling real estate training packages at least as early as 2012, court documents say, making more than $400 million in revenue between late 2014 and late 2017.
Yancey, from "Flipping Vegas," and podcaster Dean R. Graziosi were also named in the suit for marketing these seminars to their audiences. Under their settlements — the FTC's first monetary settlement involving celebrity endorsers — Graziosi will pay $1.25 million, and Yancey will pay $450,000 for their marketing of the trainings.
The settlement permanently bans the companies from selling "wealth-creation" products and services anywhere in the country, and has required them to pay $15 million to be used for refunds, on top of Graziosi and Yancey's $1.7 million.
Ten million dollars in refunds will be given to 4,670 consumers during the first wave of payouts, according to the FTC. The rest will come at a later date. Consumers who paid for Response Marketing's real estate investment training programs may file a claim for a refund.
Consumers who have questions about their payment or the claims process should contact the refund administrator, JND Legal Administration, at 877-871-0474 or visit the FTC website for questions about the refund process. The FTC never requires people to pay money or provide account information to get a refund.
