Dave Ramsey Is Facing $150M Lawsuit for Promoting a Fraudulent Company. Here’s What We Know

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Financial guru Dave Ramsey faces a $150M lawsuit. Read on for a break down of what we know so far. 

Financial guru Dave Ramsey is in hot water. For years, Ramsey has promoted Timeshare Exit Team, a company that collected $200 million from people desperate to get out of timeshare agreements. Now, 17 of the radio host and podcaster’s listeners have filed a $150 million lawsuit against him. According to the lawsuit, Ramsey played a role in defrauding them of millions of dollars by promoting a company that did not get them out of their timeshare agreements.

Follow the money

One does not have to be a fan of Dave Ramsey to recognize his style. Ramsey’s show is a mix of folksiness and frustration as he outlines his financial principles. The topic can be as simple as finding cheap life insurance or as complex as dividing an estate. Regardless of the issue, Ramsey is always the show’s star, the one listeners tune in to hear.

Diehard fans have made Ramsey rich by purchasing his books and programs like Financial Peace University for $79.99.

Another source of income for Ramsey comes via a program called RamseyTrusted. Followers turn to RamseyTrusted to find a real estate agent, tax service, insurance agent, or financial advisor. However, these are not companies or individuals Ramsey’s company identifies as being the best in their fields. They are people who pay Ramsey to endorse their services. They’re called ELPs, or “endorsed local providers.”

It’s a money-making enterprise

According to Clever Real Estate, Ramsey’s ELP program acts as a lead generation service. A Ramsey fan visits the Ramsey Solutions blog site, clicks on a box indicating which type of service they’re looking for, and then is prompted to answer a series of questions. By the time the answers are provided, RamseyTrusted has gathered enough information to generate a lead.

In addition to paying an upfront fee to become part of the ELP program, professionals must also pay monthly fees and referral payments. Here’s how Clever Real Estate breaks down those fees, specifically for real estate agents:

To become an ELP, Ramsey requires agents to have four years of experience with “some solid closings.”

Agents must also answer a survey, citing their familiarity with Dave Ramsey, including how many of his books they’ve read, podcasts they’ve listened to, and which step of his program they’re on. There’s no word on how Ramsey verifies the information.

Money from Timeshare Exit Team

Ramsey was allegedly paid as much as $30 million between 2015 and 2021 to endorse the timeshare exit company. In turn, Timeshare Exit Team collected $200 million from people who counted on them to get out of their timeshare contracts. Reports like those in The Washington Post claim that many of the clients from whom the Timeshare Exit Team collected fees were Dave Ramsey listeners. According to the lawsuit, $70 million in fees came directly from Ramsey fans who had believed the company could help them with their timeshare dilemmas.

The company behind Timeshare Exit Plan — Reed Hein & Associates — went out of business after paying more than $2.6 million to settle with Washington State over allegedly deceptive business practices.

The lawsuit

The 17 individuals involved in the lawsuit are all from Washington State or California and they filed their suit on April 28, 2023, in the U.S. District Court for the Western District of Washington. In the suit, the group claims Ramsey engaged in negligent misrepresentation, unjust enrichment, and violation of consumer protection laws as he profited from a company that was costing his listeners dearly. Also named as defendants are Ramsey’s company, Ramsey Solutions, and marketing company Happy Hour Media Group.

According to Greg Albert, the plaintiffs’ lawyer, Timeshare Exit Team promised customers a 100% money-back guarantee but had no reserve account or trust in place to repay the money. The company’s website also discouraged customers from contacting lawyers for assistance, even as they were forced to withdraw more and more money from their savings or checking accounts.

The plaintiff’s argument is that Ramsey was paid $30 million by Timeshare Exit Team “to convince Ramsey’s loyal followers to buy into this scheme through the use of deceptive, incomplete, and false information that Defendants knew or should have known” were false.

The response

Other than downplaying Ramsey’s role in endorsing Timeshare Exit Team, Ramsey’s legal team does not currently appear to be responding to requests for comments.

In 2021, when allegations against Timeshare Exit Group were brought to Washington State Attorney General Bob Ferguson, Ramsey’s attorneys claimed that Ramsey had no unique or special knowledge of the issues in the dispute. They also said that while Ramsey endorsed Timeshare Exit Group on his radio program and social media, he is not responsible for the details of the relationship.

Also, in 2021, Ramsey defended his endorsement. He said he endorsed Timeshare Exit Group because resorts had “screwed” his listeners. Further, Ramsey claimed that he “did it with great pride.”

Clearly, Ramsey’s legal team has a few challenges ahead of them. In the meantime, his shows remain as popular as ever. If you’re considering buying a timeshare, it’s worth thinking twice — especially as it may be difficult to get out of ownership if you change your mind later.

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