FILE PHOTO: Symbolic house made from one hundred dollars isolated on white background. Photo by Kostiantyn Li on Unsplash
SALT LAKE CITY – In a significant victory for consumer protection, the Federal Trade Commission (FTC) and the Division of Consumer Protection (DCP) within the Utah Department of Commerce have reached a court-ordered settlement with Response Marketing Group, LLC and its principals. The company has agreed to pay a staggering $15 million and is now prohibited from selling money-making opportunities. This lawsuit, initiated by the DCP and the FTC, accused Response Marketing of employing deceptive tactics to sell expensive real estate investment training programs. Notably, two real estate celebrities, Scott Yancey and Dean R. Graziosi, endorsed the training and have also agreed to pay a combined $1.7 million.
Response Marketing Group attracted consumers through infomercials and social media advertisements, promising to reveal the secrets of successful real estate investing. Free events were organized nationwide, where real estate celebrities Yancey and Graziosi made enticing claims about sharing their investment techniques. Scott Yancey was the star of the home-flipping show Flipping Vegas on A&E while Dean R. Graziosi is the author of Millionaire Success Habits. However, at these events Response Marketing deceived consumers into purchasing three-day workshops for approximately $1,000 by falsely guaranteeing access to exclusive tools that would lead them to become prosperous real estate investors. As alleged in the complaint filed by the DCP and the FTC, Response Marketing then deceptively promoted additional training programs that cost tens of thousands of dollars.
To upsell consumers further, Response Marketing employed telemarketing tactics to pitch a coaching program called “Inner Circle,” which could cost an additional $30,000. Most consumers who purchased Response Marketing’s products and services did not achieve success as real estate investors and failed to recover the substantial amounts spent on 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 in a statement. “Utah businesses that seek to take advantage of consumers should be put on notice.”
Busse expressed gratitude towards the FTC and the Utah Attorney General’s Office for their robust collaboration in achieving this landmark consumer protection settlement, emphasizing that the partnership allowed them to pursue these bad actors who believed they could circumvent Utah’s laws.
“We are grateful to the Utah Division of Consumer Protection for their partnership in obtaining this strong relief,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, “and we will continue cracking down on deceptive moneymaking opportunities and unlawful endorsement practices.”
In June 2022, the district court judge presiding over the case concluded that Response Marketing had made false or misleading claims, including promises of special access to a funding network for real estate deals without using personal funds, providing students with letters for discounted cash offers, and offering buyers for flipped homes. Response Marketing operated under various names, such as Affluence Edu, Cash Flow Edu, Flip for Life, OnWealth, Renovate to Rent, and Visionary Events. In December 2019, the company agreed to cease selling these packages after the complaint was filed.
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 settlement not only involves Response Marketing Group but also its affiliates, Nudge LLC and BuyPD LLC, as well as four individuals alleged to have 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. Additionally, they must pay consumers $15 million in restitution. Failure to fulfill these payments will result in an additional $15 million in civil penalties payable to the Utah DCP. The complaint identifies Brandon B. Lewis, Ryan C. Poelman, Phillip W. Smith, and Shawn L. Finnegan as the actual owners of Response Marketing.