The Federal Trade Commission is cracking down on a company it says uses deceptive tactics to lure consumers to celebrity-endorsed real estate seminars.
A federal court has entered a temporary restraining order against Utah-based Zurixx and affiliated companies. The FTC and the Utah Division of Consumer Protection (DCP) alleged that the company made deceptive promises of big profits to lure would-be real estate investors to seminars that cost thousands of dollars.
The temporary restraining order bars Zurixx from making “unsupported marketing claims and from interfering with consumers’ ability to review Zurixx and its products,” the FTC said.
Zurixx claims to offer coaching on how to make money by flipping houses. Its advertisements feature endorsements from celebrities including Tarek and Christina El Moussa from HGTV’s Flip or Flop, Hilary Farr from the same network’s Love It or List It, and Peter Souhleris and Dave Seymour from A&E’s Flipping Boston. The ads touted “free events” that Zurixx claimed would teach consumers to make profits by flipping homes “using other people’s money.”
In reality, the FTC said, the free “seminars” were sales pitches for three-day workshops that cost nearly $2,000 to attend. Attendees at the free events were allegedly told that the three-day workshop would teach them everything they needed to know in order to make substantial profits flipping homes. Presenters at the three-day workshop, however, then described it as a “beginner” course and tried to upsell attendees additional products and services that could cost as much as $41,297, the FTC said.
“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.”
The FTC also alleged that Zurixx presenters routinely encouraged seminar attendees to get new credit cards or increase limits on existing cards, purportedly to help finance real estate transactions. They allegedly told attendees to give card issuers income information that was “significantly higher” than the attendees’ actual income in order to get those increases, the FTC said. Zurixx presenters often suggested that attendees then use the new card or increased credit lines to pay for “advanced training” from the company.
Zurixx also allegedly required some dissatisfied customers who received refunds to sing agreements barring them from complaining to the FTC, state attorneys general and other regulators, submitting complaints to the Better Business Bureau, or even posting negative online reviews about the company.