FTC Takes Measures to Close Deceitful Real Estate Seminar Companies
A Complaint Filed in the State of Utah Claims Real Estate Company Swindles Seminar Participants Out of Over $400 Million. We've talked about the various real estate seminar scams in past blog updates, and we're here, constantly, letting you know that we aren't a “one and done” company that takes your money and runs. You can go through our library of content on our website, on YouTube, and all over the web, and see that we are the company that continues to educate, invest time, and mentor our students so they can succeed in real estate investing.
FTC Sues Shady Real Estate Seminar Companies
Update: A preliminary injunction stipulation was entered in the case.
The Utah Division of Consumer Protection, along with the Federal Trade Commission, has sued Nudge, LLC and two other companies that are affiliated with them. The allegations include making false promises about making money while flipping houses in an effort to get consumers to purchase training packages that total thousands of dollars in fees. In this recent filing, both organizations petitioned the court to prevent Nudge and their affiliates from continuing to sell high ticket real estate training programs.
Based on information shared in the complaint, Nudge, LLC, based out of Utah, uses real estate celebrities to promote their training products. These celebrities and their marketing tactics claim to share strategies that will allow average people to make massive profits. They make these claims at seminars focused on real estate.
Within the complaint, there is a quote from a celebrity endorser who claims that he’ll share his success formula that already has proven results. The allegations in the complaint from the FTC say these seminars are really put together to market additional expensive training products. They aren’t hosting these seminars to teach people how to make money in the real estate market.
According to a survey within the court documents, over 95% of the people in attendance at a Nudge seminar paid the company more money than they ever actually made with real estate deals.
The Bureau of Consumer Protection’s director Andrew Smith said that the defendants made empty promises promoting massive wealth, when in turn most of the customers ended up financially devastated. Making easy money is a strong lure, but consumers must take the time to evaluate promises that claim to help them make huge returns.
In 2012, Nudge started selling their real estate training programs. Within the complaint from the FTC, they claim that Nudge has made over $400 million between late 2014 and 2017.
Also within the complaint, it says the real estate scheme began by sharing advertisements with TV real estate celebrities like Doug Clark, Scott Yancey, Danny Perkins, Drew Levin, and Josh Altman. Within these advertisements, the celebrity insiders claim that they’ll share real estate tips during a free 90 minute seminar.
The complaint by the FTC says that the seminars are basically just 90 minute sales pitches designed to get the attendees to pay $1100 for a more detailed three day workshop. During this workshop, the customers, or consumers as the FTC calls them, will supposedly learn a system that will teach them how to find and discover lucrative real estate deals.
But these promises have been empty at best, because these workshops that last for three days typically share basic real estate investing information and do not provide secret lucrative tips. This is a major misrepresentation of Nudge’s services. At the end of the three day workshop, they also pitch customers to buy their advanced training that costs around $40,000 the complaint says.
Up until sometime in 2016, the complaint says that the supposed advanced training offered by Nudge gave consumer’s access to Investor Expos and Buying Summits. During these events, it was claimed that consumers were supposed to get access to discount properties that they could buy. But according to the complaint, the defendants usually brokered or sold these properties to buyers at prices that were extremely inflated.
The FTC and Utah Division of Consumer Protection filed their complaint against Nudge, LLC and BuyPD, LLC and Response Marketing Group, LLC, two of their affiliates. Among the defendants includes five executives and/or principles of these companies. They include Clint R. Sanderson, Phillip W. Smith, Ryan C. Poelman, Shawn L. Finnegan, and Brandon B. Lewis. None of the real estate celebrities used during Nudge’s marketing efforts is defendants in the complaint.
The major issues within the complaint claims that the defendants were in violation of the Telemarketing Sales Rule for the FTC as well as the FTC Act. It also comprises of three statutes in Utah including the Television Fraud Prevention Act, the Business Opportunity Disclosure Act, and the Utah Consumer Sales Practices Act.
There was a vote by commission to permit authorization to file the complaint and it was unanimous at 5-0. Due to the unanimous vote, the FTC proceeded to file the complaint in the US District Court for the District of Utah.
NOTE: The Commission proceeds to file their complaint in instances when they see reason to believe the defendants named within the complaint might violate or have already violated the law. They file a complaint once they’ve determined that a proceeding in the best possible thing to protect the best interests of the public. The court will be the one to decide the case.