Real estate investment programs and endorsers ordered to pay $16.7 million
The Federal Trade Commission (FTC) and Division of Consumer Protection (DCP), a division within the Utah Department of Commerce, have reached a court-ordered settlement with Response Marketing Group, LLC and its principals, who have agreed to pay $15 million and are banned from selling money-making opportunities. The suit brought by DCP and the FTC alleged that Response Marketing used false promises to sell expensive real estate investment training programs. Additionally, two real estate celebrities, Scott Yancey and Dean R. Graziosi, endorsed the training and agreed to pay $1.7 million.
Response Marketing drew consumers to free events nationwide through infomercials and social media advertisements in which real estate celebrities promised to share their investing techniques. At these events, Response Marketing enticed consumers to purchase 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. Response Marketing deceptively pitched additional training programs that cost tens of thousands of dollars at the three-day workshops, according to the complaint filed by DCP and the FTC.
The company then upsold consumers by pitching a purported coaching program called “Inner Circle” through telemarketing that could cost as much as an additional $30,000. Most consumers who purchased Response Marketing’s products and services did not become successful real estate investors and did not recoup the money they spent on the training programs, according to the complaint.
“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,” said Utah Department of Commerce Executive Director Margaret Busse. “Utah businesses that seek to take advantage of consumers should be put on notice.”
Busse also thanks the FTC and the Utah Attorney General’s Office for the robust partnership that brought about this successful consumer protection settlement. “This partnership gave us the reach to go after these bad actors who thought they could skirt Utah’s laws.”
In June 2022, the district court judge presiding over the case partially granted the FTC and DCP’s motion for summary judgment. The court found that Response Marketing made false or misleading claims, such as telling consumers they would get offering customers special access to a funding network for real estate deals without using their own money, providing students with letters that would supposedly allow them to make discounted cash offers, and having buyers for houses they wanted to flip for flipped homes. Response Marketing sold training programs under various names, including Affluence Edu, Cash Flow Edu, Flip for Life, OnWealth, Renovate to Rent, and Visionary Events. In December 2019, Response Marketing agreed to stop selling these packages after the FTC and Utah DCP filed their complaint.
The settlement also involves Response Marketing’s affiliates, Nudge LLC and BuyPD LLC, and four individuals who allegedly owned the company. As part of the settlement, the companies, owners, and Response Marketing’s President are prohibited from selling “wealth creation” products and services nationwide and must pay consumers $15 million in redress. Failure to make these payments will result in an additional $15 million in civil penalties payable to the Utah DCP. According to the complaint, the actual owners of Response Marketing are Brandon B. Lewis, Ryan C. Poelman, Phillip W. Smith, and Shawn L. Finnegan, and Response Marketing’s President is Clint R. Sanderson.
The settlements with Graziosi and Yancey are the FTC’s first monetary settlements with celebrity endorsers. Under their settlements, Graziosi will pay $1.25 million, and Yancey will pay $450,000.
The settlements being announced today resolve all the claims against all the defendants in the FTC and the DCP complaint, which alleges violations of the FTC Act, the Telemarketing Sales Rule, and several Utah statutes.