The ACCC has declared a property business and its director as making false or misleading representations about profiting through property investment, who made the claim of being able to purchase a property for $1.
The ACCC Federal Court found We Buy Houses, along with its director Rick Otton, as advertising how to create profits through property by way of paid seminars, boot camps, mentoring programs and published materials, which was targeted towards potential owners.
However, the court found that the strategies suggested could only be implemented by those who already owned property, or could finance a bank loan and as such were making false or misleading representations.
Justice Jacqueline Gleeson found Mr Otton to be a “very unreliable witness who was prepared to maintain or defend statements that were obviously untrue or misleading,” in addition to being “habitually careless with the truth in making statements and claims designed to promote [his and We Buy Houses’] business interests”.
Responding to the findings in a statement, Mr Otton was said to be considering the findings being made, and was pleased the court took the phrase of “How to Buy a House for $1” not at face value.
“As I so often explained, the technique was designed to help home owners who can no longer pay home loan repayments and with the help of a turnaround specialist, ensure that they do not become mortgagee sale roadkill,” Mr Otton said.
“We accept Her Honour’s findings that insufficient proof was presented to prove how this vendor finance technique can work in practice.”
The claims were focused on how consumers could:
- Buy a house for only $1 without using a deposit, bank loan or any previous real estate experience;
- Create enough of a passive income to quit full-time work;
- Build up a portfolio without any money of their own or from a bank without any previous real estate experience; and
- Make profits instantly
Further, the court also stated Mr Otton made false or misleading representations by using the strategies successfully, and authored a book with testimonials from those claiming to be students, saying they purchased property for $1.
“We Buy Houses sold a lie to vulnerable consumers that home ownership could be achieved easily through strategies taught by Mr Otton,” said ACCC deputy chair Delia Rickard.
According to Ms Rickard, approximately 2,000 people spent about $3,000 per ticket to attend boot camps, and 700 people were involved in the mentoring program at a cost up to $26,000.
“Today’s judgment sends a strong message to ‘property spruikers’ that they must not make false or misleading representations about the success and profitability of their ‘wealth creation strategies’ to induce consumers to pay significant sums to learn about them,” she said.
“Consumers who attended We Buy Houses seminars, boot camps and mentoring should be aware that, in her judgment, Justice Gleeson stated that for ordinary consumers seeking to achieve the outcomes represented by We Buy Houses and Mr Otton, the free seminars were a waste of time, and that the boot camps and the mentoring programs were an expensive waste of time.”