Customers to get millions in refunds after 'deceptive' Utah-based real estate investment scheme

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Standard-Examiner (Ogden, UT)

Thousands of customers duped by what the Federal Trade Commission calls a fraudulent, celebrity-promoted real estate training program will soon get a refund as part of one of the largest consumer protection settlements in Utah history.

Response Marketing, which according to state records is registered in Lindon, Utah, was sued by the Federal Trade Commission in 2019 after accusations that it made “empty promises about earning money by ‘flipping’ houses, to convince consumers to buy real estate training packages that cost thousands of dollars,” according to the complaint.

In May 2023, the commission announced a $16.7 million settlement, paid out by the company and two TV real estate and investment celebrities, Dean Graziosi and Scott Yancey. On Thursday, the commission said it will be paying more than $10 million to 4,670 customers who bought into the scheme.

“Checks for the first 10 million dollars are in the mail. This helps heal at least some of the harm caused at the hands of Response Marketing and the other defendants,” said Douglas Crapo, director of White Collar and Commercial Enforcement at the Utah Attorney General’s Office, in a statement.

The settlement also barred the company from selling “wealth creation” products and services in the U.S. When it was announced, executive director of the Utah Department of Commerce Margaret Busse called it “the largest consumer protection division settlement in Utah’s history.”

According to the lawsuit, Response Marketing and affiliated companies, Nudge LLC and BuyPD LLC, used infomercials and social media to promote a $1,000, three-day workshop promising to “provide consumers with access to special tools that would enable them to become successful real estate investors.”

According to the FTC, Response Marketing would also try to up-sell its customers during the workshops, including a coaching program with a $30,000 price tag.

However, a judge found that Response Marketing made several false or misleading claims, telling customers they would have access to a funding network for real estate deals without having to use their own money and that they would have “buyers for houses they wanted to flip,” according to court documents.

The Utah Division of Consumer Protections said that most customers “did not become successful real estate investors and did not recoup the money they spent on the training programs.”

About one year after filing the initial complaint, the FTC named Graziosi and Yancey in the lawsuit, described by the FTC as “the primary celebrities that Nudge used to draw consumers into attending training seminars.”

In a news release, the Utah Attorney General’s Office said both men 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 that it was a scam.”

Graziosi writes self-help and investment content and has a YouTube channel with nearly 170,000 subscribers; Yancy previously starred in the A&E show “Flipping Vegas.” Both men were named in the lawsuit in 2020 and in 2023 agreed to pay a combined $1.7 million for their involvement with the company.

In a statement, Busse, the executive director of the Utah Department of Commerce, said consumers should research and “conduct thorough checks” before investing in similar products.

“Companies that rely on deceitful or manipulative tactics to earn money will not be tolerated in Utah as it not only undermines people’s financial security but also the very trust we have in each other that is crucial to our (number one) ranked economy,” she said.

The FTC says most customers will receive checks in the mail. Any consumer who paid for a Response Marketing investment training program can file a claim for a refund.

Utah News Dispatch is a nonprofit, nonpartisan news source covering government, policy and the issues most impacting the lives of Utahns.