ERSP Recommends Rich Dad Education, Inc. Modify Certain Testimonials Claims for Real Estate Education Program

The Electronic Retailing Self-Regulation Program (ERSP) has recommended that Rich Dad Education, Inc.,  modify or discontinue certain claims made in student testimonials featured at the  Rich Dad Education website.

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus, Inc. The marketer’s advertising came to the attention of ERSP through an anonymous competitor challenge.

ERSP reviewed advertising claims that included:

• “Rich Dad Education's Free Workshops are eye-opening, 2-hour sessions with the definite potential to change your life for the better!”
• "FinFreedomBound – Profit: $72,500”
• “WholesalePro – Profit: $20,383”

ERSP also reviewed claims made during free live seminar events, including:

• Claims that the presenter would teach consumers how to do a wholesale real estate deal and make $10,000 in the next 60 days

ERSP was primarily concerned with the specific quantified profits earned by former and current students that are being featured on the “Real Estate Deals” tab of the website. ERSP noted that there appear to be two different categories of deals – “Deals of the Month” and “Most Recent Deals.” The only apparent distinction between the two categories is that the “Most Recent Deals” contains an asterisk that leads to a disclosure at the bottom of the webpage. With respect to the “Deals of the Month” category, there is no apparent accompanying disclosure language to indicate whether or not these particular results are typical, and, if not, a disclosure of the amount of money they may expect to earn from using the program.

In general, when reviewing direct response marketing in the real estate investing industry, ERSP takes a broad approach and looks at the messages communicated as a whole, across all medium of marketing. Generally, the key issue before ERSP in this particular product category is whether the advertising at issue conveys specific express or implied earnings expectations to consumers, aside from the general message that they could earn money using the techniques outlines by the program.

In this instance, ERSP noted its concern about the lack of any clear and conspicuous disclosures concerning the typical results consumers can generally expect to achieve from using the product.
ERSP as well determined that the performance claims that formed the basis of inquiry did not communicate any specific express earnings expectations for consumers besides the general message that they can earn money using the techniques taught at the Rich Dad Education program.

ERSP acknowledged that the marketer possesses survey results to demonstrate that students of Rich Dad do indeed experience success. However, ERSP noted that the potential for consumer uncertainty exists because the disclosure in the advertisement notes that the stated results are predicated on the purchase of advanced training courses and this may not be apparent to a consumer who is simply interested in the free live event and the possibility of earning supplemental income.

ERSP recommended that the marketer refrain from making quantified earnings claims without clearly and conspicuously disclosing what students of the program can typically expect to earn. ERSP additionally recommended that Rich Dad discontinue the use of such unverified testimonial claims in its advertising material and at free live seminars.

The company, in its marketer’s statement, said that it “takes seriously our obligations to our students and the consuming public and strive to be honest, open, and in compliance with our legal obligations” and that it “has removed the ‘Real Deal from Real Estate Investors in Real Estate’ webpage from its website for reasons independent of ASRC’s Review and it is our present intention not to host such a page on our website in the future whereby it could be construed that Rich Dad Education was making implied claims regarding the amount of monetary success achievable by our students without ensuring that all appropriate disclaimers were provided.”