FTC Acts Against Company Using Celebrity Endorsements, Bogus Earnings Claims to Sell Real Estate Seminars

A federal court has entered a temporary restraining order against Utah-based Zurixx, LLC and affiliated companies, which the Federal Trade Commission (FTC) and the Utah Division of Consumer Protection (DCP) allege have used deceptive promises of big profits to lure consumers into real estate seminars costing thousands of dollars.

The order prohibits Zurixx from making unsupported marketing claims and from interfering with consumers’ ability to review Zurixx and its products. The court has appointed a temporary monitor over Zurixx and instructed the companies to preserve their assets.

Zurixx purports to offer consumers coaching and training on how to make large sums of money by buying houses and quickly updating and reselling them, a practice known as “flipping.” Its advertisements routinely feature endorsements from celebrities like 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.” The ads entice consumers to free events that Zurixx claimed would teach consumers how to make large profits by flipping “using other people’s money.”

“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 complaint filed by FTC and DCP alleges that Zurixx’s free event is in fact a sales presentation for its three-day workshops that cost $1,997. Zurixx presenters have told free event attendees that the three-day workshop would teach them everything they need to know to make substantial income from real estate. Presenters at the three-day workshop, however, have often described it as merely a “beginner” course, while upselling consumers additional products and services that can cost as much as $41,297.

Zurixx presenters have generously peppered their sales pitch with purported success stories of Zurixx’s customers, the complaint alleges. Presenters have routinely directed workshop attendees to obtain new credit cards or increase the credit limits on existing cards, purportedly to help finance real estate deals. They allegedly told attendees to give card issuers income information that is significantly higher than the attendees’ current income, based on the supposed likely increase in the attendees’ income from investing in real estate. Zurixx presenters have often suggested that attendees then use the new credit to pay for “advanced training” from Zurixx, according to the complaint.

Zurixx allegedly has 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.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Utah. The FTC would like to thank the Cottonwood Heights Police Department for the significant support it provided in this matter.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.