$478 million judgment for deceptive infomercials
A federal court agrees with the FTC that purveyors of 3 get-rich-quick real-estate schemes sold systems that yielded almost no profits.
If you've ever heard a real-estate infomercial promising you quick, easy money from investing in real estate, you've probably wondered if it's too good to be true.
If you've already tried investing in real estate, you already know it's too good to be true. You can make money in real estate, but it's rarely quick or easy.
The federal district court in California this week ordered the marketers of three get-rich-quick real-estate systems to pay a record fine of $478 million, saying the companies deceived the more than 1 million consumers who bought their products.
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The products promised real-estate riches in exchange for materials that cost $39.95 each — plus $39.95 a month additional that the FTC said wasn't adequately disclosed — and personal coaching services for which consumers paid up to $14,995. Almost no one made any money.
"This huge judgment serves notice to anyone thinking of using phony get-rich-quick schemes to defraud consumers," Jeffrey Klurfeld, director of the Western Region of the Federal Trade Commission, said in a statement. "The FTC will come after you if you violate the law. It’s also a reminder to consumers that they should be skeptical about these types of easy-money claims."
The fines follow a judgment in May against the purveyors of three systems: John Beck's Free & Clear Real Estate System, John Alexander's Real Estate Riches in 14 Days and Jeff Paul's Shortcuts to Internet Millions.
The order also includes a lifetime ban on infomercial production and telemarketing against Beck, Douglas Gravink and Gary Hewitt, the two founders of Family Products, which produced the infomercials.
An attorney for Gravink and Hewitt said his clients would appeal the lifetime ban. "We just believe the evidence doesn't support that kind of a harsh and broad order," Larry Russ of Russ August & Kabat told Reuters. Beck's lawyers declined to comment.
One person who paid Beck's organization $12,675 for coaching wrote to Ripoff Report about his attempt to get the company to honor a money-back guarantee. He wrote:
"I worked extremely hard completing ALL assignments. I ended up having two coaches because the first was totally inadequate. He wouldn't formulate his lessons around what I needed help with. Nevertheless, I completed the course and received a Certificate of Completion.
"I made no money. I sincerely tried, but it just didn't work."
If people are dumb enough to believe that crap, they should pay the 39.95 fine!
Good!!! Even though there is "a sucker born every minute", this kind of scheme needs to be stopped. I'm a licensed builder, and I can tell anyone that no one makes $10,000, $20,000, or $30,000 instantly buying real estate. It's a scam, it's a bunch of garbage, and every one of these hucksters need to pay the penalty.
So many people have tried to put the blame for the housing bubble on Fannie May and Freddy Mac, or Barney Frank, or poor people, when this whole thing was driven by the Bush speech of May 17,2002. He called for legislation aptly named The American Dream Down Payment Fund, taxpayer money to assist a first time low income home buyer make a down payment. Next he called for the Single Family Home Affordability Tax Credit, but that wasn't enough. Next he called for a 'streamlining' of the purchasing proess, i.e. hurry up and get them signing on the dotted line. And then he got Fannie Mae and Freddie Mac to increase their committment to this by more than $440 billion.
And then you have those people who bought into one of these get rich quick scams buying up homes and trying to flip them for a profit. One woman I met actually thought she could have a little paint thrown on the walls, hang a few pictures, or hanging plants, and she could quickly flip a house for a profit of $20 or 30,000. If she couldn't she was in trouble financially.
All of this brought down a housing market that was healthy at one time, and it's sad to see what happened to this industry, and the American people.
If I don't get a $75k/year job within 2 weeks of graduating school I am suing the university for the amount of tuition plus an undisclosed punitive damage monetary amount.
These "white collar" criminals should be cleaning trash off of city streets in orange jump suits and then returned to their prison cells at night. Every day for at least 5 years.
Mr. dinur Kirkland (mr dinur)- I hear what you're saying, but only to a point, (acknowledgement), because it's exactly just that kind of thinking, when allowed to take over, that actually perpetuates the deception. Buyer Beware! is not a adequate forewarning. People (Citizens) of this Country have the Right to "expect" that what is being so blatantly put out there, by any Company, MUST BE TRUE BECAUSE WE HAVE LAWS AGAINST PUTTING OUT THERE (for a price and monetary gain) WHAT ISN'T TRUE!!!
Also, there's an olde-time factory "dynamic" called "piece meal". My Mother did it. Instead of being paid an hourly wage she was paid "piece meal" to sew zippers into pants at a factory. She happened to be really good at it and sewed enough zippers into pants over the course of her day to make better than the standard hourly wage of that time. $478 million dollars in relation to DECEPTION in this Country is just a drop in the bucket. "PIECE-MEAL" the DECEPTION in this Country instead of just going for a one and only "overall" hourly wage AND IT WILL ADD UP to more than just a drop in the bucket! SYNERGY: greater than the sum total of it's parts!
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.