We Buy Houses & Rick Otton Fined $18M Over False Claims
Property spruiker, Rick Otton, and his organisation ‘We Buy Houses’ has been fined a whopping $18 million – the Federal Court’s highest penalty for an Australian Consumer Law contravention by a corporation and individual to date.
The ACCC asserts We Buy Houses and its sole director Mr Otton made false and misleading representations about wealth creation via its property buying and selling methods.
We Buy Houses and Mr Otton taught real estate investment strategies via free seminars, paid bootcamps and mentoring programs, with claims including;
- buy a house for $1, without needing a deposit, bank loan or real estate experience, or using little or none of their own money
- create passive income streams through property and quit their jobs
- build a property portfolio without their own money invested, new bank loans or any real estate experience
- start making profits immediately and create or generate wealth
In August 2017, the Federal Court deemed such claims false or misleading, and in contravention of Australian Consumer Law – breaching sections 18, 29(1)(f), 29(1)(g), 34 and 37.
We Buy Houses has been conducting training programs since 2000, with the ACCC revealing it generated over $20 million in revenue between 2011 and 2014.
A book authored by Mr Otten and associated websites, were found to feature false and misleading ‘student’ testimonials including purchasing a house for $1.
It comes as the ACCC commenced proceedings against We Buy Houses and Mr Otten in March 2015, following a coordinated investigation with NSW Fair Trading.
“These record penalties demonstrate the determination of the ACCC to take strong and effective enforcement action against businesses and individuals who prey on consumers using the false hope of creating financial success,” remarks ACCC Chair Rod Sims.
“The judgement signals the Court’s condemnation of false and misleading property spruiking and get rich quick schemes.”
We Buy Houses has been penalised $12 million, and Mr Otton $6 million. Otton has also been banned from managing a corporation in Australia for ten years.
Concerning judgement on liability, Justice Gleeson affirms free seminars were a ‘waste of time’, with the paid bootcamps and mentoring programs an ‘expensive waste of time.’
Mr Otton and We Buy Houses has also been permanently banned from further involvement in the “supply or promotion of services or advice concerning real property transactions or investment”.
“We Buy Houses and Mr Otton peddled false hope to people simply looking to get a foothold in the housing market or invest money in real estate for their future,” adds Mr Sims.
“They have also effectively been permanently banned from any further involvement in real estate in order to protect consumers.”
The news continues a recent trend, imposing heightened penalties against ACL breaches.
“We can expect this to continue following recent law changes to increase maximum financial penalties under consumer law,” states Mr Sims.
Further information is available on the ACCC’s website here.