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John T. Reed on getting a refund from Russ Whitney Copyright 2004 by John T. Reed Not paying refunds to unhappy customers seems to be the main reason various real estate gurus have gotten into big trouble. Guru Ed Beckley was shut down by the Iowa attorney general for not paying refunds. So what' the law on refunds and what information is there on whether Whitney pays refunds? Federal regulation Title 16 Chapter I of the Code of Federal Regulations prescribes Part 429 rule concerning cooling-off period for sales at home or at certain other locations. Here is a copy of that rule with the parts that do not apply to Whitney' seminars deleted to make it easier to read. Part 429 For the purposes of this part the following definitions shall apply: (a) Door-to-Door Sale--A sale, lease, or rental of consumer goods or services with a purchase price of $25 or more, whether under single or multiple contracts, in which the seller or his representative personally solicits the sale, including those in response to or following an invitation by the buyer, and the buyer's agreement or offer to purchase is made at a place other than the place of business of the seller (e.g., sales"¦at facilities rented on a temporary or short-term basis, such as hotel or motel rooms, convention centers"¦) (b) Consumer Goods or Services--Goods or services purchased, leased, or rented"¦including courses of instruction or training regardless of the purpose for which they are taken. (c) Seller--Any person, partnership, corporation, or association engaged in the door-to-door [Whitney soliciting customers in hotel meeting rooms appears to fit the above definition of door-to-door sales] sale of consumer goods or services. (d) Place of Business--The main or permanent branch office or local address of a seller. (e) Purchase Price--The total price paid or to be paid for the"¦goods or services, including all interest and service charges. (f) Business Day--Any calendar day except Sunday or any federal holiday (e.g., New Year's Day, Presidents' Day, Martin Luther King's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, and Christmas Day. Sec. 429.1 The Rule. In connection with any door-to-door sale, it constitutes an unfair and deceptive act or practice for any seller to: (a) Fail to furnish the buyer with a fully completed receipt or copy of any contract pertaining to such sale at the time of its execution, which is in the same language, e.g., Spanish, as that principally used in the oral sales presentation and which shows the date of the transaction and contains the name and address of the seller, and in immediate proximity to the space reserved in the contract for the signature of the buyer or on the front page of the receipt if a contract is not used and in bold face type of a minimum size of 10 points, a statement in substantially the following form: ``You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.'' The seller may select the method of providing the buyer with the duplicate notice of cancellation form set forth in paragraph (b) of this section, provided however, that in the event of cancellation the buyer must be able to retain a complete copy of the contract or receipt. Furthermore, if both forms are not attached to the contract or receipt, the seller is required to alter the last sentence in the statement above to conform to the actual location of the forms. (b) Fail to furnish each buyer, at the time the buyer signs the door-to-door sales contract or otherwise agrees to buy consumer goods or services from the seller, a completed form in duplicate, captioned either ``NOTICE OF RIGHT TO CANCEL'' or ``NOTICE OF CANCELLATION,'' which shall (where applicable) contain in ten point bold face type the following information and statements in the same language, e.g., Spanish, as that used in the contract. Notice of Cancellation [enter date of transaction] ________________________________________________________________________ (Date) You may CANCEL this transaction, without any Penalty or Obligation, within THREE BUSINESS DAYS from the above date. If you cancel, any property traded in, any payments made by you under the contract or sale, and any negotiable instrument executed by you will be returned within TEN BUSINESS DAYS following receipt by the seller of your cancellation notice, and any security interest arising out of the transaction will be cancelled. If you cancel, you must make available to the seller at your residence, in substantially as good condition as when received, any goods delivered to you under this contract or sale, or you may, if you wish, comply with the instructions of the seller regarding the return shipment of the goods at the seller's expense and risk. If you do make the goods available to the seller and the seller does not pick them up within 20 days of the date of your Notice of Cancellation, you may retain or dispose of the goods without any further obligation. If you fail to make the goods available to the seller, or if you agree to return the goods to the seller and fail to do so, then you remain liable for performance of all obligations under the contract. To cancel this transaction, mail or deliver a signed and dated copy of this Cancellation Notice or any other written notice, or send a telegram, to [Name of seller], at [address of seller's place of business] NOT LATER THAN MIDNIGHT OF [date]. I HEREBY CANCEL THIS TRANSACTION.

(Date)_________________________ (Buyer's signature)___________________ (c) Fail, before furnishing copies of the ``Notice of Cancellation'' to the buyer, to complete both copies by entering the name of the seller, the address of the seller's place of business, the date of the transaction, and the date, not earlier than the third business day following the date of the transaction, by which the buyer may give notice of cancellation. (d) Include in any door-to-door contract or receipt any confession of judgment or any waiver of any of the rights to which the buyer is entitled under this section including specifically the buyer's right to cancel the sale in accordance with the provisions of this section. (e) Fail to inform each buyer orally, at the time the buyer signs the contract or purchases the goods or services, of the buyer's right to cancel. (f) Misrepresent in any manner the buyer's right to cancel. (g) Fail or refuse to honor any valid notice of cancellation by a buyer and within 10 business days after the receipt of such notice, to: (i) Refund all payments made under the contract or sale; (ii) return any goods or property traded in, in substantially as good condition as when received by the seller; (iii) cancel and return any negotiable instrument executed by the buyer in connection with the contract or sale and take any action necessary or appropriate to terminate promptly any security interest created in the transaction. (h) Negotiate, transfer, sell, or assign any note or other evidence of indebtedness to a finance company or other third party prior to midnight of the fifth business day following the day the contract was signed or the goods or services were purchased. (i) Fail, within 10 business days of receipt of the buyer's notice of cancellation, to notify the buyer whether the seller intends to repossess or to abandon any shipped or delivered goods. Must mention orally Note 429.1(e). It requires that Whitney' people "inform each buyer orally, at the time the buyer signs the contract or purchases the goods or services, of the buyer' right to cancel." [Emphasis added] One Whitney customer sent me an email saying, ""¦it was not mentioned once during the sign up process." Complaining to the FTC How do you file a complaint about Russ Whitney or one of his companies with the Federal Trade Commission? Click on https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01. That takes you to the FTC Consumer Complaint Form. Here is what the FTC says about what happens to your complaint. While the FTC does not resolve individual consumer problems, your complaint helps us investigate fraud, and can lead to law enforcement action. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel®, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide. Three days As you should have noted reading the above federal regulation, Whitney has to give you three business days after the date you sign to change your mind about what you signed up for. It is my impression that he does, but I have been asking readers for a copy of the written notice he has to give you and I have never received one from a Whitney customer. I have heard that bad real estate gurus in general do, indeed, "furnish" a copy of the right to cancel notice, but that they bury it about 2/3 of the way back in one of the books they include in their materials"”apparently so customers will not find it until too late. I do not know whether Whitney furnishes such a notice as required or, if he does, how easy it is to find in the material given to the customer. Can cancel up til the end of the first day of the seminar? A number of Whitney customers have told me that they were told they could cancel and get a refund up until the end of the first day of the seminar. Is this true? Please let me know. If you have a copy of such a refund guarantee, please send it to me. Also I would like to know what happened to persons who tried to exercise this belated right to cancel. One attendee was told you have to attend the first day of the paid seminar in question to get the refund. That participant learned that the refund was not 100% as he had believed. Rather, it is less than a full refund. I got an email shortly after I posted this article from a Whitney supporter (or associate"”one never knows) who claimed that the agreement allows Whitney to keep part of the seminar tuition if software was included in the tuition and that it must have been software that caused the individual who told me he got less than 100% to get less than 100%. I ask that attendee or any other to respond to that. I also note that if the software was given to the student on the first day, he probably has had no opportunity to use it by the time he asked for a refund at the end of the first day. Also, companies that sell software generally give a full refund if the package is not opened. Seems that a person who received a sealed package and was told, "If you open it, you bought it," would refrain from opening it if they planned to ask for a refund. What is the effect of the can-cancel-up-until-the-end-of-the-first-day offer? Mainly, it would be likely to cause customers who might have canceled during the three-day cooling-off period to let that federal deadline pass without cancelling. Another effect is to cause customers to wait until they have spent time and money to travel to the seminar site"”perhaps including hotel reservations"”before they try to cancel. Most people are probably reluctant to take such action after they have invested travel time and money that will not be refunded by Whitney. Defeats the "˜cooling-off"™ period Most importantly, the whole idea of the "cooling-off" period is to let you make the final decision away from the influence of Whitney' super high-pressure salespeople and mob psychology. If you wait until you are back in the "belly of the beast" to make your final decision, you are once again subject to their highly skilled attempts to sway you emotionally to "commit" to Whitney' program"”their "pushing all the right buttons" as one attendee put it.. Finally, I have heard that much of the first day is devoted to telling you over and over that the good stuff is in the second and third day. If that' true, they are essentially saying that the first day is really not a valid indication of the value of the seminar. Only the second and third days are. Of course, if you wait until then, it' too late to invoke any end-of-the-first-day refund right. I am also told that there is not any good stuff in the second and third day. Rather, it is just more hype to get you to sign up for more Whitney seminars. A couple of people told me they did get refunds from Whitney. One had to rant and rave and contact all sorts of government agencies to get it. A former Whitney employee also told me they had meetings where they decided which refunds to pay"”but that they were looking for justification like a death in the family or terminal-cancer diagnosis. But my general impression is still that they pay far fewer refunds than the customers request. I am not sure of the percentage, but it sounds like the vast majority of refund requests are denied and that you may have to demand the refund rather strenuously to be one of the few to get it. Other refund laws There are many other refund laws. Some are state laws. Also, contract law would apply in ever state. Your contract with Whitney may be verbal or written, but there is no doubt that you have a contract with him if you paid him or one of his companies anything. Texas Proprietary School Act One state law that requires refunds is the Texas Proprietary School Act. Generally, it requires almost full refunds if the student never takes the course and pro-rated refunds if the student takes part of the course. If Whitney' policy with Texan is as stated above"”three days to cool off after signing up and have to request refund by end of first full day, he is not complying with the Texas Proprietary School Act the way I read it. For example, the Texas Act says that if a person takes 2/3 of a three-day seminar, they get a 1/3 refund. Whitney' policy appears to be that if you take 2/3, you get zero refund. Whitney' policy of zero refund if you never take a seminar within one year of signing up also sounds like it violates the Texas Act. Here is an article I wrote that analyzes the subject in detail: WhitneyTexas.html. To complain to Texas send an email to  In addition to no-show and pro-rated refunds, the Texas Proprietary School act orders full refunds to those who attended all of the seminar if there was any misrepresentation or other misbehavior. Does Whitney pay refunds when requested in a timely fashion? The Better Business Bureau gives Whitney companies an "unsatisfactory" rating. One reason they give is "due to unanswered complaints and that those complaints "˜"¦concern requests for refunds not received that were cancelled during 3-day right to cancel"™." The reliability report on Whitney was at https://www.bbbwestflorida.org/commonreport.html?bid=6095131 last time I checked. If that does not work, go to the BBB Web site and search for Whitney by name and city and state (Cape Coral, FL). Whitney is in the territory of the Better Business Bureau of West Florida, Inc. To file a complaint with them, go to https://www.bbbwestflorida.org/complaint.html. Whitney alternately complains about the integrity of the Better Business Bureau and says he is working with them to resolve the complaints. If that' true, you should make sure you file a complaint with them so that yours is one of the complaints he has to resolve to get a satisfactory rating. What Whitney' annual report filed with the Securities and Exchange Commission says about refunds Whitney Information Network, Inc. is a publicly traded company. That means they have to file an annual report and other reports with the SEC. You can read those reports at https://www.sec.gov/edgar.shtml. You may need the CIK number for Whitney' company. It is 0001095276. Here is what their annual report says about refunds on page 14 under "Accounting policies." "Students pay for the courses in advance, the fees are generally non-refundable"¦A student of a [sic]] advanced training course may request and receive a refund before the start of the second day of training. A student may also receive a refund within three days of their purchase by exercising a right of recision." [Emphasis added] And it says this on page F-10 under "Revenue Recognition, Deferred Revenue, and Deferred Expenses." "Revenue from educational seminars is recognized upon the earlier of (1) when the nonrefundable deposit is received for the seminars and the seminar has taken place or (2) upon the contractual expiration of the Company' obligation to provide the seminar"¦" [Emphasis added] Number (2) apparently refers to their saying you can attend the seminar for up to a year from when you sign up. After that, they get to keep all your money and you don"™t get squat"”unless you"™re a Texan and Texas enforces the Proprietary School Act. "˜We never give any money back"™ Here is a comment from Salt Lake City attendee of one of Whitney' seminars: "One comment by the trainer that particularly caught my attention: The trainer was talking about borrowing money from a bank (a non-secured loan) and buying a property and then fixing up the property and reselling it for a profit. (Not so bad of a suggestion.) [Reed comment: I agree, but it' much easier said than done.] Then he asked what we thought we should do with that money (the proceeds of the sale) after we had sold the property. One attendee said to pay back the bank for the original non-secured loan. The trainer comment, in a forceful marine sergeant type of voice, was, "˜No, we never give the money back."™ I thought this was probably more a statement about the Russ Whitney Company than about real estate investing." [Another Reed comment: Generally, you should pay off the unsecured loan as soon as you can because they typically have very short terms, high interest rates, and therefore, high payments. Reluctance to pay down a loan makes far more sense if you are talking about a normal, 30-year, fixed-rate mortgage with an attractive or market rate.] Credit card company If you charged your Whitney seminar by credit card, you may be able to get a refund through your credit card company. I am not aware of any published rules on when they do and do not grant refunds, but they seem to be rather consumer oriented. Get to the "˜next level"™ Many Whitney customers have told me that virtually every contact with the Whitney organization, whether by phone or in a paid seminar or whatever, results in high pressure to sign up for yet another seminar that will take you to "the next level." "You say the stuff you learned in the last seminar isn"™t working? You need to take the next seminar." The phrase "the next level" and other words and phrases like "commitment," "fishing with a net instead of a hook," are apparently used by Whitney sales people to push yo to sign up for more seminars. Your refusal to do so is often characterized as lack of commitment, etc. When you asked tough questions, you are often attacked verbally along the lines that by asking that question, you reveal that there is something wrong with you. One woman was told she had "trust issues" that she needed to deal with. If other prospective customers are around when you ask tough questions, you will be ordered to leave immediately and hotel security will be called if you do not. There is more about the incessant pressure on you to buy more seminars in my articles What happens to you at Whitney' free training and What happens to you at Whitney' paid seminars. Tell me about your experience If you have had any experience, successful or otherwise, seeking a refund from Whitney, please tell me about it. Thanks, www.johntreed.com John T. Reed on real-estate-investment information John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, www.johntreed.com

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