FTC Wins Judgment Against Makers Of 3 Get-Rich-Quick Infomercials

We don’t know why people still fall prey to infomercials promising easy paths to riches. And yet, the Federal Trade Commission says a trio of popular get-rich-quick programs — all backed by the same two people — took consumers for a total of $450 million by misleading them into believing they could quickly earn piles of cash in real estate or Internet marketing.

The three infomercials — see examples below — are for “John Beck’s Free & Clear Real Estate System,” “John Alexander’s Real Estate Riches in 14 Days,” and “Jeff Paul’s Shortcuts to Internet Millions.”

Last week, a U.S. District Court in California issued a summary judgment against the makers and stars of the ads, finding that the John Beck system falsely represented that consumers could purchase homes at tax sales in their own area for pennies on the dollar and that they could make money easily with little financial investment; that the earnings claims in the John Alexander infomercial were false; and that the Jeff Paul ads misled consumers by claiming that “a typical consumer can easily, quickly, and ‘magically’ earn thousands of dollars per week simply by purchasing and using” Paul’s system.

In reality, the FTC alleged that less than 1% of consumers who purchased the systems made a profit.

In addition to the misleading claims, the court sided with the FTC in finding that the defendants failed to adequately disclose that consumers who purchased the systems would be enrolled in a $39.95/month subscription plan. Oh — and customers’ payment information was used without their express informed consent, in violation of the FTC Act and the Telemarketing Sales Rule.

Then there were the “personal coaching services” sold to consumers for as much as $14,995, with the promise that those who enrolled in the coaching program would quickly and easily earn back that cost and that the program would substantially enhance their earning potential. Alas, the court found that almost everyone who purchased coaching programs lost money.

Now the defendants and the FTC have a few weeks to submit briefs arguing for how much the infomercial folks should be penalized. The FTC wants penalties in excess of the $450 million it says the marketers earned. The defendants argue that the court should at least subtract the money earned by those customers who did earn a profit after purchasing one of the products.

Comments

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  1. StatusfriedCrustomer says:

    They also implied that subscribers would get gorgeous girls like those spokesmodels, and yet only 1% of buyers actually got them.

  2. Bagels says:

    Makes me long for the carefree days of Carlton Sheets

    • AllanG54 says:

      I guess he wanted nothing to do with these slime balls, otherwise he would have filed a friend of the court brief.

  3. GuyGuidoEyesSteveDaveâ„¢ says:

    Explain to me how to magically make money on the internet! http://www.youtube.com/watch?v=8feO7ikpNtc

  4. TheMansfieldMauler says:

    Ok, now what I want to know is what those 1% did to actually make money.

    • sir_eccles says:

      They put adverts on TV telling people how to make millions.

    • Blueskylaw says:

      They pulled the copper out of the homes they bought and sold it to a scrap yard.

    • voogru says:

      They’ll tell you for 39.95/month

    • Back to waiting, but I did get a cute dragon ear cuff says:

      You can actually make money on tax sale properties. It is not quick and it is a gamble but it can be done. Not exactly sure of what money changes hands, but here is what happens in MD.

      You buy the property at tax sale. The property owner has a number of months to redeem it with minimal expenses paid to the buyer. After a certain point, the buyer of the property can charge fees to allow the owner to redeem the property. These are usually a tidy profit to the buyer, no home rum, but a decent return.

      If the owner, for whatever reason, does not redeem the property by paying the buyer his fees and then paying the taxes, the buyer at the tax sale then owns the property and can do with it as they please. In that case, you have hit the home run and own the property for small fees and the back taxes.

  5. Blueskylaw says:

    Any person that falls prey to commercials featuring beautiful women in bathing suits, yachts, mansions, Ferraris, fat cats smoking foot long cigars and champagne being served to people in olympic sized swimming pools deserves to lose their money.

  6. Happy Tinfoil Cat says:

    I am amazed that the FTC would want them to be fined the amount they stole. Normally, the FTC would charge them ~2% fine and make them sign a paper to not do the illegal stuff they already did, illegally. But I suppose that only happens to large corporations. If you are only one or two guys, you’ll have to do restitution. At least they aren’t talking about doing jail time, I mean, that would be too much to ask for. /s

  7. Retired Again says:

    FTC is the PROBLEM. The crooks know they can take in hundreds of millions from innocent consumers before getting their hands spanked. I was a witness against similar crooks — Result from BIG FTC CRACKDOWN —- made me want to go get 100 million dollars and then lose so little. NO JAIL TIME ever for these crooks. FTC loves headlines but at the expense of the consumers. All fish in the same pond.

  8. ancientone567 says:

    WOW it is all so exciting! I can’t wait to be a billionaire! Who do I pay my 1000- dollars to? I wanna be rich! /s

  9. spmahn says:

    I miss Tom Vu and those two Midget Twins

  10. spmahn says:

    Whatever happened to Tom Vu or The Rice Twins?

  11. Gman says:

    Free speech or not so many of these folks are just scamming innocent people. FTC needs to make stronger truth in advertising laws. So many of these folks just say whatever they want and then take it all back with some 2 pt font text at the bottom of the screen [conveniently/"accidentally" cut off] that all claims are not regular or not expected, etc.

    They should have to say, like in presidential ads that results are not regular and the actual expected percentage of people who will make a profit or the average expected profit to be made.

    • voogru says:

      That doesnt matter. People will still fall for it by the loads because they will think they’re special.

      People play the lottery even though they know the chances are slim.

  12. apember says:

    What has always amazed me is that these spammer’s commercials are shown on major networks. Sometimes there is a disclaimer posted before the commercial, but it seems to me that when these prostitutes (oh excuse me I meant networks) allow these frauds to buy time on their networks, they are part of the problem too.

  13. drjayphd says:

    John Beck’s Free & Clear Real Estate System

    Seems to have worked about as well for him as his approach to playing quarterback in the NFL.

  14. 420greg says:

    The $39.95 a month is another reason why EACH and EVERY charge to your credit card needs to be authorized by you. The FTC should make companies that auto bill credit install automated system that call you each month. Press 1, to authorize this charge. 2 to cancel this service/product.

    Companies like this would never get enough money to buy TV time.

  15. palace_gypsy says:

    Now, if they can only get Kevin Trudeau out of my television!!

  16. ironflange says:

    I make money the old-fashioned way, by helping Nigerian princes get their due. In fact, at this very moment. . .

  17. Gladeye says:

    I read a great book about infomercials called “But wait, there’s something more.” The author claims that the crooks who run these commercials understand that government fines are part of the game and the cost of doing business. The fines are a drop in the bucket compared to what they rake in. That’s why the same people keep coming back.

  18. Razor512 says:

    those programs do work, the key is using HD sunglasses while searching for tax sale property

  19. shthar says:

    Defendents promise to have the money in 14 days or less.