Did you ever think those celebrity-endorsed “get rich quick by using other people’s money to flip houses” real estate seminars seemed too good to be true? Well, it turns out you may have been right.
The Federal Trade Commission and the Utah Division of Consumer Protection announced this week that they are charging a Utah-based company with allegedly lying to consumers to convince them to attend the company’s supposedly free real estate seminars. The company promised to give away the secrets to making money flipping houses at the event, but actually charged thousands or tens of thousands of dollars for said “secrets.”
According to the FTC, Zurixx entices people to attend its “free” real estate seminars by using HGTV stars and other TV personalities as celebrity endorsers and claims that attendees can learn how to flip houses to make money.
But the agency claims that the entire operation is a scam, with the company allegedly using “deceptive promises of big profits to lure consumers into real estate seminars costing thousands of dollars.”
The FTC claims that Zurixx uses celebrities in its advertisements to lend credibility to the seminars, including endorsements from Tarek and Christina El Moussa from HGTV’s “Flip or Flop,” Hilary Farr from HGTV’s “Love It or List It,” and Peter Souhleris and Dave Seymour from A&E’s “Flipping Boston.”
According to the FTC, the ads convinced consumers to attend free events that would teach consumers how to make large profits by flipping “using other people’s money.”
But the agency claims that the free events are actually a sales presentation for Zurixx’s three-day workshops that cost $1,997.
According to the FTC, during the free events, Zurixx repeatedly tells consumers who sign up for its three-day workshop that they are likely to earn thousands of dollars in profit, often with little risk, time or effort.
“Zurixx also represents that consumers who purchase the workshop will receive 100% funding for their real estate investments regardless of their credit history,” the FTC said in its complaint. “It backs up these representations with a money-back guarantee – consumers who do not make ‘a minimum of three times’ the price of the three-day workshop within six months will receive their money back.”
According to the FTC, Zurixx presenters have told attendees at these free events that the three-day workshop would “teach them everything they need to know to make substantial income from real estate.”
If that pitch is successful in getting someone to fork over the nearly $2,000 for the three-day workshop, the selling allegedly doesn’t stop there.
According to the FTC, presenters at the three-day workshop often claim that the workshop is “merely a beginner course,” then upselling consumers additional products and services that can cost as much as $41,297.
But according to the FTC, many of Zurrix’s claims about its system are “false or unsubstantiated.”
From the complaint:
Consumers are unlikely to earn thousands of dollars in profit from real estate investments by using Zurixx’s products. Consumers are unlikely to receive 100% funding for real estate deals through Zurixx or its partners and affiliates. Moreover, Zurixx’s six-month money-back guarantee contains substantial limitations that Zurixx fails to disclose adequately until after consumers have paid for the three-day workshop.
The agency also states that Zurixx presenters “generously” include supposed success stories into their sales pitches.
According to the FTC, presenters also allegedly “routinely” directed workshop attendees to obtain new credit cards or increase the credit limits on their existing cards, supposedly to help finance their house flips.
Beyond that, the presenters allegedly told attendees to provide the credit card companies with income information that was “significantly higher” than their current income, basing that inflation on the supposed increase in the attendees’ income from investing in real estate.
But, instead of using that increased credit flexibility obtained under questionable circumstances to invest in real estate, Zurixx presenters allegedly often suggested that attendees actually use the new credit to pay for “advanced training” from Zurixx itself.
Zurixx’s business model has come under fire in recent years, with many customers accusing the company of using false advertising to entice them to attend the company’s events.
According to a 2016 article from the Orange Country Register, Zurixx seemingly claimed in an ad that Tarek and Christina El Moussa would attend one of the company’s real estate seminars, and would teach their flipping strategy to the attendees.
But when the seminar, the “Flip or Flop” stars were nowhere to be found.
Others had similar experiences, leading to hundreds of complaints being filed with the FTC.
Eventually, Christina El Moussa ended up going on ABC to defend the Zurixx seminars, claiming that she does attend the seminars, if they are held close to her house.
From ABC:
Christina El Moussa said that she does attend seminars, when the events are close to her home.
“If it’s going to be within 45 minutes from my house I’m definitely going to come,” she said. “It gets harder to travel all around, especially [because] we have two kids.”
Christina recently attended seminars in St. Louis and Miami, but Zurixx said even those appearances are uncommon, adding that “nowhere on any other marketing does it state the El Moussas will be live and in-person at any event.”
According to the FTC, some of Zurixx’s unsatisfied customers have tried to obtain a refund from the company, but the company allegedly required some consumers who received a refund to sign an agreement barring them from speaking with the FTC, state attorneys general and other regulators; submitting complaints to the Better Business Bureau; or posting negative reviews about Zurixx.
The complaint alleges that Zurixx has violated the FTC Act’s prohibitions on misleading and deceptive conduct and the Consumer Review Fairness Act, as well as the Utah Consumer Sales Practices Act and the Utah Business Opportunity Disclosure Act.
“From start to finish, these defendants used the promise of easy money and in-depth information to lure consumers down a path that could cost them thousands of dollars and put them in serious debt,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “When a company tells consumers they have the secret to get rich with little work, we encourage consumers to take a hard look at what’s really being offered.”
To read the FTC’s complaint in full, click here.
