ACCC Takes Action Against "We Buy Houses" and Rick Otton

In a soon to be heard case, and following a co-ordinated investigation with the New South Wales Fair Trading (NSW Fair Trading), the Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against We Buy Houses Pty Ltd (We Buy Houses) and Rick Otton for alleged contraventions of the Australian Consumer Law [Sch 2 to the Competition and Consumer Act 2010 (Cth)].

Background

Mr Otton is the author of How to Buy a House for a Dollar. The training programs range from $2,997 for a boot camp up to around $17,000 for the mentoring program.

We Buy Houses is involved in the promotion of wealth creation strategies for real property transactions. As part of its business, We Buy Houses conducts seminars, boot camps and other training programs.

Definition of Rent-to-Buy Schemes

Rent-to-buy schemes are generally marketed to consumers who cannot secure a regular home loan. Renters pay above-market rent for a period of several years, after which they have the option to purchase the property at a price specified at the outset.

The Allegations

The alleged conduct includes several representations made to consumers that, by attending seminars and boot camps, consumers will be taught strategies to enable them to, for example:

• buy a house for $1;
• buy a house using little or none of their own money; and
• build property portfolios without their own money invested and without new bank loans.

The ACCC alleges that the strategies do not enable consumers to buy a house for $1 but rather involve consumers acting as middlemen to facilitate property transactions between third party sellers and third party buyers. For example, in the context of the “rent to buy” strategy, the ACCC alleges that this strategy only allows a consumer to secure an option for $1 to purchase a house at a later date, subject to payment of the full purchase price in order to exercise the option.

The ACCC Chairman, Rod Sims said:

The alleged representations were made in a number of mediums since at least 1 January 2011 including in published materials, on websites and during various events such as seminars and “boot camps”.

The ACCC has obtained a delegation from ASIC to also institute proceedings under the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) as some of the matters may fall within the financial consumer protection jurisdiction of ASIC.

The ACCC has been assisted by other Australian Consumer Law regulators particularly NSW Fair Trading and Consumer Protection WA.

Penalties Sought By The ACCC

The ACCC is seeking declarations, pecuniary penalties, permanent injunctions, corrective advertising and costs against We Buy Houses and Rick Otton. The ACCC is also seeking a disqualification order against Mr Otton.

Comment by Rick Otton

In a statement, Mr Otton said he would vigorously fight the action, and that the strategies contained in his book are actually consistent with the Federal Government’s own advice.

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ACCC takes action against We Buy Houses and Rick Otton over ‘rent-to-buy’ scheme – Article from news.com.au

Coordinated investigation results in ACCC taking action against We Buy Houses and Rick Otton regarding property strategies – ACCC Release MR 23/15