Keeping it Real (Estate): FTC Secures First Monetary Settlement Against Celebrity Endorsers
On May 22, 2023, the Federal Trade Commission (FTC) announced its first monetary settlement with celebrity endorsers for a combined $1.7 million.
The complaint filed by the FTC and the Utah Division of Consumer Protection (DCP) against Response Marketing Group, LLC and its principals, also named two real estate celebrities as defendants—Scott Yancey, star of the home-flipping show Flipping Vegas on A&E, and Dean R. Graziosi, author of Millionaire Success Habits. The complaint alleged that defendants used false promises to sell consumers expensive real estate investment training programs, which Yancey and Graziosi promoted. Yancey and Graziosi were also allegedly involved in efforts to bury online customer complaints that said Response Marketing was a scam and cost consumers more than $400 million.
According to the complaint, Response Marketing attracted consumers to “free” seminars through advertisements in which real estate celebrities, including Yancey and Graziosi, promised to share insider tips on how to make money in real estate. The FTC’s complaint charged that at these events, Response Marketing enticed consumers to purchase three-day workshops for around $1,000 and at the three-day workshops, Response Marketing deceptively pitched additional advanced training programs that could cost up to $40,000. The program was marketed as exclusive “Inner Circle” training with limited spots and would allow consumers to work closely with a purported real estate expert.
The FTC alleged Yancey and Graziosi were the primary celebrities used to draw consumers into attending the training seminars and were typically paid a percentage of all the money spent by consumers who purchased training and coaching programs. Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, explained the FTC and Utah DCP believe “these two TV personalities each made millions of dollars by assisting and facilitating this real estate investment rip-off.”
Under their settlements, Graziosi will pay $1.25 million and Yancey will pay $450,000.
Two of Response Marketing’s affiliates are also part of the settlement, along with the four individuals who the complaint alleges were the actual owners of Response Marketing. Under the settlement, these three companies, the four owners and Response Marketing’s President, are banned from selling “wealth creation” products and services and are required to pay $15 million, which will be used to provide redress to consumers.
Noreen M. Verini at Hunton Andrews Kurth also authored this article.