Record $18m fine for "false hope" peddling by Rick Otton and We Buy Houses
Written on the 15 November 2018 by Matt Ogg
It started with free seminars and "boot camps" teaching people how to get rich quick. Buy a house with no need for a deposit, quit your job and you'll be set for life, participants were told.
But what We Buy Houses Pty Ltd and its sole director Rick Otton (pictured) were claiming really was too good to be true.
Following action from the Australian Competition and Consumer Commission (ACCC), the Australian Federal Court has imposed record penalties reaching $18 million against Otton and his company for making false or misleading representations about wealth creation through buying and selling real estate.
The Federal Court has banned Otton from managing corporations for 10 years in Australia, while permanently restraining him and We Buy Houses from further involvement in services or advice relating to real property transactions or investment.
The fines of $12 million against We Buy Houses and $6 million against Otton personally are the highest ever imposed for controventions of Australian Consumer Law by a corporation and an individual, respectively.
"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," says ACCC Chair Rod Sims.
"The record penalties imposed against both We Buy Houses and Mr Otton reflect their egregious conduct.
"They have also effectively been permanently banned from any further involvement in real estate in order to protect consumers."
Sims says the record penalties show the ACCC's determination to take "strong and effective enforcement action" against those who prey on consumers using the false hope of building financial success.
"The judgement signals the Court's condemnation of false and misleading property spruiking and get rich quick schemes," he says.
"This outcome also reflects a recent trend of higher penalties for Australian Consumer Law breaches. We can expect this to continue following recent law changes to increase maximum financial penalties under consumer law.
"In her judgement on liability, Justice Gleeson said the free seminars were a waste of time, and that the boot camps and the mentoring programs were an expensive waste of time."
The Court also found that Otton had made false or misleading representations that he had successfully implemented the wealth creation strategies he taught.
In addition, a book authored by Mr Otton, and websites operated by We Buy Houses and Mr Otton, included testimonials from 'students' claiming they were able to buy a house for $1, which the court found were false or misleading.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Author: Matt Ogg