Dave Ramsey, a popular radio host who preaches the gospel of debt-free living, is adored by many financial advisers who do business with his organization by paying for potential client leads.
Those advisers call and email potential clients, many of whom are evangelical Christians like Ramsey, with pitches that may begin with the phrase, “Dave Ramsey let me know that you’re looking to speak with a financial adviser.”
It turns out Ramsey is also currently endorsing a business that is the center of a recent lawsuit by Washington state Attorney General Bob Ferguson. Called Timeshare Exit Team, the company promotes its ability to get consumers out of real estate investments. Timeshare Exit Team is listed as one of several companies under the heading “Dave Recommends” on his website.
According to the complaint, which was filed in February, Timeshare Exit Team, also known as Reed Hein & Associates, uses numerous unfair or deceptive business practices related to services to “exit” consumers’ timeshares.
“Reed Hein advertised a 100% money-back guarantee,” the attorney general’s office alleges. “In reality, many consumers have struggled to obtain refunds, and are still denied refunds even after the company has failed to deliver for years.”
In a video ad posted on the website for Timeshare Exit Team, Ramsey paints a different picture of the company. “At first I was reluctant to partner with a company involved in the timeshare exit space,” Ramsey says. “You have to be very careful about who you partner with. Trust me.”
Yet, Ramsey has been endorsing the company for about three years.
Ramsey’s radio show is broadcast by hundreds of stations in the United States. As InvestmentNews reported in 2017, financial advisers may profit handsomely from their association with Ramsey, his radio show and assorted businesses by getting leads to potential clients who sign up through the Dave Ramsey Show website.
At that time, advisers paid fees for the referrals, ranging between $400 per month and close to $900 per month, based on the size and population of the territory, as well as the number of referrals that come in over a period of time.
Advisers pay the advertising fee and are part of a directory, called SmartVestor Pros.
Ramsey and his various businesses are not named in the complaint but are mentioned a handful of times, with the complaint naming the Dave Ramsey Show as “Reed Hein’s most profitable endorsement.” Reed Hein also prioritizes “complaints and refund requests where the customer threatens to contact the Better Business Bureau, State Attorneys General, private attorneys, or the Dave Ramsey Show,” according to the complaint.
On the website for the Dave Ramsey show, there is no listing of how much Ramsey charges Timeshare Exit Team for the endorsement. Timeshare Exit Team generally charges between $3,000 and nearly $9,000 for its services, according to Washington state
“For many consumers, Reed Hein’s promise of a 100%, money-back guarantee was a major factor in their decision to contract with the company,” according to the attorney general’s office. “In practice, Reed Hein regularly denies refunds.”
Reed Hein has contracted to provide 38,000 timeshare exits, according to Washington state. Of those, 17,000 are still pending — more than 8,000 for two years or longer, and more than 4,600 for three years or longer.
“While we have always respected the office of the Washington State Attorney General and believed their focus was on consumer protection, we are extremely disappointed to see they have aligned themselves with an industry who preys on the very consumers they pledge to represent,” wrote Brandon Reed, CEO of Reed Hein & Associates, in an email. “We strongly disagree with the allegations leveled in this complaint.”
A spokesperson for Dave Ramsey, Megan McConnell, did not respond to multiple calls and emails seeking comment.
According to Ferguson’s office, Reed and his partner Trevor Hein “formed their company in 2012, after Reed attended a trade show where he noticed a long line at a booth selling timeshare exit services. Their prior business had been to sell rain gutter systems.”
A timeshare is shared ownership of vacation real estate and typically sold by the week. Timeshare exit businesses have recently proliferated as many consumers look to get out of the contracts, and that may increase due to consumers’ traveling less due to COVID-19 and looking for cash, noted Lisa Ann Schreier, an expert on timeshares who has written books on the topic.
“While some states require some sort of license to sell timeshares, there is no license requirement for any company or individual claiming to get consumers out of timeshare contracts, making this arena even murkier and more fraught with pitfalls for consumers,” Schreier said in a telephone interview. “What consumers need to understand is that this industry has had 40 years to construct these contracts that favor the developer.”
If financial advisers want to keep doing business with Dave Ramsey, he should keep a close eye on what companies he endorses.