The FTC and Colorado Attorney General have filed a complaint against Russ Dalbey for allegedly defrauding consumers with his “Winning in the Cash Flow Business” system. You may have seen the TV infomercials with Dalbey claiming people could make big sums of money as a note broker in three easy steps… Find ‘Em, List ‘Em, and Make Money… in just minutes a day.
The claims were backed by testimonials from students that are also being questioned. The courts are seeking an order to stop any misleading claims and obtain money for refunds.
The Truth About the Cash Flow Note Business
The cash flow business is like any other business. It takes hard work, commitment, time, knowledge and a strong marketing plan to make money buying or referring notes. For real answers and straight talk about the note business check out these articles:
Reading the recent FTC filings will likely make one think…“If it sounds too good to be true then it probably is!”
Excerpt from FTC Press Release on May 31, 2011 entitled:
FTC Charges Promissory Note Pitchman with Deceiving Consumers
…“‘Winning in the Cash Flow Business’ was a real loser for hundreds of thousands of consumers nationwide,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “When someone is selling a program designed to help people make money, they have to accurately describe how much consumers can expect to make and be truthful about how quickly they will be able to do so. None of that happened in this case, and people who bought the program paid the price.”
Millions of consumers nationwide saw infomercials for the “Winning in the Cash Flow Business” program, which were hosted by TV personality Gary Collins. The program supposedly teaches consumers how to find, broker, and earn commissions on seller-financed promissory notes – privately held mortgages or notes that are often secured by the home or land that is the subject of the loan.
The FTC complaint alleges that consumers spent approximately $40 to $160 on the initial program, and were later encouraged to spend hundreds or thousands of dollars more on additional products or services, such as multi-day seminars, coaching sessions, and promissory note holder lead lists. Few of these consumers made the money that Dalbey promised them. The FTC and the State of Colorado seek a court order to stop Dalbey, his wife, and the corporate entities they control from making the allegedly misleading claims, and to obtain money for consumer refunds.
According to the complaint, since at least 1996, Dalbey has used various corporate entities to market his program. Beginning as early as 2002, he has done so mainly through a 30-minute infomercial. Along with pitches on the Internet and through direct mail, the infomercial claimed that consumers could successfully earn substantial income brokering promissory notes in three easy steps – “Find ‘Em,” “List ‘Em,” and “Make Money.”
“You’ll be amazed at just how easy it is to generate a stream of extra income every month. Build financial freedom and a better quality of life in just minutes a day. Or even retire earlier than you ever dreamed possible. Order now and you’ll be ready to profit in minutes,” an infomercial allegedly claimed.
These claims allegedly were supported by “testimonials” from consumers who claimed to have made “$1.2 million in 30 days,” “$79,000 in a few hours,” and “$262,216 part time,” for example. “In less than 30 days, I closed two transactions and I netted 1 point – a little bit over $1.2 million,” a testimonial by “Don B.” from New York stated.
Unfortunately, according to the FTC and Colorado Attorney General, this was far from the typical consumer experience. The complaint charges that Dalbey and the other defendants violated the FTC Act and Colorado law by making false and unsubstantiated claims that consumers are likely to quickly and easily find, list, and broker promissory notes and earn substantial amounts of money; and that defendants’ additional products and services, such as coaching programs, workshops, seminars, note holder leads, and other resources, will meaningfully increase the likelihood that consumers will succeed in the note business.
The complaint also alleges that while Dalbey claimed he has earned substantial money finding, listing, and brokering promissory notes himself, most of his note-related income for the past two decades has come from marketing and selling products and services supposedly to teach consumers how to find and broker such notes. In addition, the complaint alleges that consumer testimonials in the defendants’ advertising are inaccurate and do not reflect the results that customers are likely to achieve if they buy the program. For example, some testimonialists, the complaint charges, stated earnings claims that were total earnings figures accumulated over several years, rather than in one year.
The complaint also charges the defendants with violating the FTC’s Telemarketing Sales Rule by making similar misrepresentations to consumers during sales calls.
Finally, the FTC and Colorado Attorney General charged Marsha Kellogg – one of the consumers who provided a testimonial in an infomercial – with falsely claiming that she earned $79,975.01 from one promissory note transaction using Dalbey’s program, and that her total earnings were more than $134,000. The complaint alleges that Kellogg made this statement even though she earned $50,000 less than what she claimed.
Source: FTC News at http://www.ftc.gov/opa/2011/05/dalbey.shtm
To read the complete press release with links to the court filings and to get information on how to spot “get-rich-quick” schemes visit the FTC website.