Dave Ramsey in Court?

 

For anyone who has read my blog over the years, my dislike and distrust of Dave Ramsey should come as no surprise.  (See “Dave Ramsey’s Fatal Flaw” part one and part two.)  I now have more affirmation of my disdain.

The Washington Post reported last week that seventeen of Mr. Ramsey’s radio and podcast listeners have filed a $150 million lawsuit against him, “alleging that he played a role in defrauding them of millions of dollars when he promoted a timeshare-exit company that did not get them out of their contracts.”

I wrote in recent posts that celebrities like Tom Brady and Steph Curry stand in legal peril for endorsing the cryptocurrency firm, FTX, and its disgraced founder.  I cautioned against following financial advice given by famous people.  Fame doesn’t bestow competency in financial matters.  In fact, there seems to be an inverse relationship. 

But Dave Ramsey?  Financial guru, professed Christian, champion of the little guy, and debt relief savior for millions? 

I do not dispute Ramsey’s good works through the years.  He truly has helped legions of individuals and families claw their way out of debt and given a lot of good advice.  Not all of it good, mind you, but a substantial portion.  But he comes at it with the wrong attitude.

Alright, I admit that “attitude” is intangible and maybe not always a good measure of someone’s trustworthiness.  But that blustering and (in my opinion) un-Christian approach to his advice-giving emits a suspicious odor to my nose and leaves a clue to his motivation: he is moved by money more than his love for helping people.  In this case, greed may have overridden due diligence in his endorsement of Timeshare Exit Team several years ago. 

I’m not endorsing buying a timeshare.  They do tend to be or become bad deals for people who purchase them.  But that presents an opportunity for unscrupulous people to prey on those purchasers by offering to get them out of their deals, break their contracts.  In this case, Reed Hein & Associates, doing business as Timeshare Exit Team, allegedly paid Ramsey as much as $30 million over six years while receiving over $70 million in fees from Ramsey’s listeners who became clients.  Reed Hein & Associates went out of business after settling with Washington state for $2.6 million over alleged deceptive business practices.

This points to an unfortunate business practice of “endorsements” by trusted individuals or firms, even non-profit firms, given with no due diligence.  They fall victim themselves to firms that approach them waving money in the air and promising great results for clients referred to them by the endorser.  In this case, I can imagine Ramsey—who already railed against timeshares—was targeted by Timeshare Exit Team as a perfect (that is, trusted) spokesman for them, promised him a rich commission, and with little or no investigation on Ramsey’s part was endorsed heartily on his show.

It happens all the time, unfortunately.  A friend recently complained to me that she is dropping her United Healthcare Medicare Advantage plan because it was hardly paying anything on her medical bills.  “But AARP endorses them,” she lamented.  “I expected better.”  Well, I am pretty sure AARP is pleased with the commissions they get for endorsing United Healthcare.  And that AAA is happy with their commissions from Hertz, even though there are probably better and cheaper rent-a-car firms out there, even when compared to the “AAA member discount” from Hertz.

I had a front row seat to this dynamic at one of my past jobs.  Companies would make an appointment with our vice president and tout the benefits they could offer our members, and the VP would sign a contract almost on the spot, little or no research done.  I remember he even inked a deal with some outfit called “Players Club” that promised discounts and specials perks at gambling venues like Las Vegas.  What were we doing endorsing a deal like that when we were ostensibly a “healthcare organization”?  Fittingly, none of our members became clients of Players Club and our company never made a cent on that contract.  I happily exited that company a short time later.

The moral of the stories is this: do your own due diligence.  Follow the money, because if there’s someone somewhere making money on an endorsement, then there is a high probability of tainted motive in the arrangement.

Until next time,

Roger

“You can tell them by their fruits.” Matthew 7:15, Phillips