A man and his company who claimed people could buy a house for $1 have been fined a record $18 million for misleading consumers.
The Federal Court imposed the fines on Rick Otton and his company We Buy Houses after an investigation by the Australian Competition and Consumer Commission (ACCC) and New South Wales Fair Trading.
The court found the organisation's expensive real estate investment strategies and mentoring programs contained false or misleading claims.
ACCC chairman Rod Sims said the company was charging customers for advice that "sounded credible and very sophisticated but ultimately didn't work".
"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," Mr Sims said.
"These were programs that the judge described as 'an expensive waste of time' and I think the judge got it right.
"It was a very sophisticated marketing approach using very complicated terms but ultimately it didn't work and it cost Australian consumers a lot of money."
Between 2011 and 2014, We Buy Houses made $20 million running free property seminars, $3,000 bootcamps and mentoring programs that people paid up to $26,000 to attend.
Company and director banned
Among the claims made by Mr Otton and his company were that people could:
- 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
- Start making profits immediately and generate wealth
In August last year the Federal Court found these claims were false or misleading, contravening Australian Consumer Law.
In a decision handed down on Thursday, We Buy Houses was fined $12 million for the breach and Mr Otton was fined $6 million.
Both have been banned from any further involvement in the real estate industry.
"This was a record penalty under Australian consumer law in relation to a company, and it's 10 times larger than any other penalty against an individual," Mr Sims said.
The court found that Mr Otton's claim that he had successfully implemented the wealth creation strategies he taught, were false and misleading.
It also found "students'" claims that they were able to buy a house for $1, which appeared on company websites and a book Mr Otton wrote, were false or misleading.
We Buy Houses has conducted training programs since 2000 and had recently expanded to the United Kingdom.
