Some buyers call classes by 'Flip or Flop' stars misleading
NEW YORK (AP) — For Doug Stephens, the free event seemed like a good way to learn how to flip homes. An online ad for the December gathering sported pictures of Tarek and Christina El Moussa, the stars of HGTV's "Flip or Flop" who buy rundown homes, renovate them and try to sell them for a profit. Stephens watched "Flip or Flop" regularly, along with 2.8 million other Americans, so he went.
The El Moussas, however, did not show up. In a prerecorded video, the couple told attendees that they were busy working and filming their show. Undeterred, Stephens paid $1,997 for three days of classes and $1,000 for real estate software. But the classes turned into a sales pitch to buy additional courses that cost thousands more, said Stephens, a pastor and teacher from Havana, Florida.
"They weren't really teaching at all," he said.
The El Moussas, like many reality TV stars before them, are capitalizing on their fame by offering pricy classes. At free events in hotel ballrooms, instructors tell attendees that if they pay to enroll in three-day courses, they'll learn how the couple flips homes and also gain access to investors who will give them cash to buy properties, even if they have low credit scores or a weak job history. They'll earn back their money quickly, the instructors say, and will get refunds if they don't flip a home within a certain amount of time.
But about a dozen people interviewed by The Associated Press said those promises did not pan out. Although class leaders offered some instruction, a lot of time was spent pushing them to buy more classes, they said; some complained that getting refunds for the sessions was difficult.
Stephens said his instructor avoided answering questions, told attendees not to speak to each other and spent a lot of time hyping the program. The homework on the first day was for attendees to call their credit card companies and increase their credit limits, he said. On the last day, Stephens said, the instructor pushed them to buy training sessions, some of which cost around $26,000.
The classes featuring the El Moussas are run by Zurixx LLC, an education company based in Utah. Zurixx has partnered with other reality TV stars to create education programs under different names, some of which also have been the subject of complaints from students. A section of Zurixx's website that listed its programs and the reality stars it works with disappeared as the AP reported this story. The company said it is continually updating its website.
Last year, Zurixx brought in $130.1 million in total revenue, the company told Inc. magazine. The El Moussas' program, Success Path Education, is Zurixx's most popular and the couple receives a percentage of the Success Path classes sold, the company said.
The El Moussas are a big draw, with "Flip or Flop" ranked as HGTV's second-most watched show. And home flipping is hot off TV, too: The number of flips, considered a property sold twice within 12 months, rose this year to the highest point in six years, according to RealtyTrac.com.
Roger Behle, the El Moussas' attorney, said the couple did not have time to be interviewed for this story.
The U.S. Federal Trade Commission, which aims to protect consumers against unfair or deceptive business practices, has received 50 complaints about classes connected to Zurixx since 2013, according to documents reviewed by the AP. And in May, the Better Business Bureau office of St. Louis warned people about Success Path events in the city, citing the more than 150 complaints it received about classes related to the company.
Zurixx said the complaints represent a tiny percentage of the more than 370,000 people who have attended its events and the 75,000 who have paid for its products. The company said that nearly all its students have filled out positive evaluations about the classes and the company provided copies of more than 2,300 of those evaluations. It also said that it does not mislead people or push attendees to buy additional classes.
Zurixx also provided contact information for 13 people, including Billy Batson of North Port, Florida, who said he has flipped 17 properties since he paid $25,000 for a mentor and one of Zurixx's classes two years ago. Batson said he probably could have been successful without the training, but that the process would have taken longer. Batson said Zurixx paid for a trip to Las Vegas for him and a girlfriend so he could talk to students.
"It's been a really great life-changing experience," he said.
Patricia Briggs paid $1,798 earlier this year for a three-day Success Path class, hoping it could change her life, too.
The day after she finished the classes, Briggs found three properties to try to flip near her home in Roseburg, Oregon. She said she called Success Path several times to help her connect with the promised investors, but that no one ever picked up the phone. (The company said it had no record of the calls.) A few weeks later, Briggs said she received calls from Success Path representatives who told her that they could put together a team from the El Moussas to help her, but only if she paid another $8,000. She said no and asked for a refund of her $1,798. She was offered half and she took it, she said, but still wants the balance back.
When she sees the El Moussas on TV now, Briggs said, "I want to go through my screen and shake the both of them."
Carol Lepine, who went to a Bonita Springs, Florida, event last year, said she was shocked when she learned the El Moussas would not appear and left without buying any classes.
"It's a definite bait and switch," she said.
Zurixx said its mailed invites do not state that the stars will be there, and that the El Moussas can't go to every class but show up when they can.
This summer, Zurixx held dozens of free Success Path events across the U.S., Canada and Puerto Rico as HGTV aired the fifth season of "Flip or Flop" and a spinoff, "Flip or Flop: Selling Summer." More free seminars are scheduled in November, including in New York, Minneapolis and San Jose, California. HGTV spokeswoman Audrey Adlam said in a statement that the network and its parent company, Scripps Networks Interactive Inc., are not associated with Success Path and other classes. She declined to answer specific questions, including how many complaints the network has received about the classes.
Other reality TV stars have had trouble with their real estate classes, most notably Republican presidential nominee Donald Trump, who starred on NBC's "The Apprentice." Trump was sued over his Trump University both by students and New York's attorney general, who contended the real estate classes were merely a vehicle to sell more training that cost as much as $35,000. Eric Schneiderman, the attorney general, called the university a "straight up fraud." Trump has said he will prevail in the lawsuits.
Another former reality star, Armando Montelongo of A&E's "Flip This House," was sued in February by more than 160 people who said his company's $1,500 home-flipping classes were "ruses" to sell more training that cost as much as $54,000. The case, which was filed in a California court, was voluntarily dismissed by the students in September after the jurisdiction was contested. It will be refiled in Texas where Montelongo lives, according to court documents. In a statement, Armando Montelongo Companies said the lawsuit was "frivolous."
Anyone who purchases classes from Success Path must sign a receipt with an arbitration clause on the back noting that any dispute with Zurixx must be lodged in Salt Lake City and "be conducted on a confidential basis." Complainants seeking less than $10,000 can make a claim in small claims court, according to the document. Those interviewed by the AP said they did not realize they were ceding their rights to sue by signing the receipt.
The company said it favors arbitration because it is a cheaper and a faster way for customers to resolve disputes.
Two of Zurixx's owners have run into trouble with Utah regulators in the past. Premier Mentoring Inc., which was owned by Zurixx co-owners Jeff Spangler and Cris Cannon, was accused in 2008, 2009 and 2014 of deceptively selling training programs over the phone, according to documents from the Utah Division of Consumer Protection. The first two cases were dismissed after the company reached an agreement with customers; in the 2014 case, the company settled by paying a fine. Spangler and Cannon told the regulator that Premiere Mentoring stopped telemarketing operations in 2013.
Customers who took some of Zurixx's other classes had complaints that echoed criticisms of the El Moussas' offerings.
Gloria Pettis, a budget analyst from San Diego, paid $1,500 for a three-day small business class that featured Daymond John, a star of ABC's "Shark Tank." She said she paid for Daymond John's Launch Academy because speakers at a free event in January said they could help her create a prototype for a wearable tracking device for children that she wanted to make and sell.
During the entire three days, Pettis said no instructor ever asked her about the product she wanted to make. But employees suddenly became interested, she said, after she told them she opened a new credit card with a $30,000 limit, an assignment the class was given on the first day. Workers pulled her out of class six times, she said, pushing her to buy more training in Las Vegas for $27,000. She did not.
Zurixx said it asks students to increase their credit limits and open new cards to have access to funds for unexpected business costs, but Pettis said it was made clear to her that the new card was to be used to pay for the Las Vegas classes. Zach Rosenfield, a spokesman for John, said the "Shark Tank" star was unavailable for an interview. An ABC representative did not respond to requests for comment.
Susan Martin went to a free Zurixx event featuring reality TV stars Andy and Candis Meredith of "Old Home Love," a show that aired on HGTV and its sister channel the DIY Network. She ditched day two of her $1,997 three-day class, she said, because she was told to raise her credit limit and buy $23,000 in additional education. Brian Samuels, a manager for the Merediths, said the couple did not have time to be interviewed because of their shooting schedule.
Martin, a retired bookkeeper from Chico, California, received a refund after she wrote a negative review on the Better Business Bureau website.
Two months later, she received an invite to another free event that featured a picture of the El Moussas on the front, under the sentence: "Do you have the courage to retire rich?"
"These people are so stupid that they actually invited me again after I complained," Martin said. "Or they thought I was dumb enough to fall for it again."
Contact Joseph Pisani at http://twitter.com/josephpisani . His work can be found at http://bigstory.ap.org/author/joseph-pisani .