We haven’t looked at a “free money!” teaser in a while, so when readers asked about this one I figured I should check it out — it’s another one that’s all about “loopholes” and “bonus cash” and “signing up to qualify” or “putting your name on a list”… which means that in all likelihood this is not really the “free money” that the ad would like you to believe. But still, sometimes there’s a real idea under the tease… so let’s check it out.
Here’s the pitch at the top of the ad:
“Last year a little-known loophole allowed a handful of regular Americans to legally collect over $105,868,000 in bonus cash.
“Here’s the one simple step you must take before June 19, 2020 to qualify for the next round of payouts…
“This income-boosting loophole is so obscure, less than 1/10 of 1% of Americans are taking advantage of it.
“And that’s a shame. Because it allows you to boost your income by up to $18,836.
“Every year. For the rest of your life.“
What person in retirement, or contemplating retirement, wouldn’t be tempted by that? And apparently it’s available to everybody…
“This income boost is available to EVERYONE.
“Whether you’re 25… 40… 65… or even 80!
“In fact, my research shows 100% of the people who put their name on this “plan’s” list were approved.
“You heard that right.
“Every single person who ever applied to this program had the chance to receive money.”
They also throw in some examples, with photos of smiling people, to make it seem ever more real…
“Brian W. from Augusta, Georgia would back me up on that.
“Even though he’s 48—and decades from retirement—he was still able to tap this opportunity for more than $2,043.
“Kathy N. a 57-year-old from Pennsylvania collected $5,121.
“And Tom S. who’s 69, raked in $18,836 last year thanks to this loophole.
“That’s just over $1,569 a month.”
I’m sure those are based on real people, though they’ve probably changed the names — sometimes they pull them from communications from their subscribers, but as often they just pull from public records… which oftentimes means that the people they cite as pulling down big income from these “programs” are actually the board members or other reporting insiders of the publicly traded company being teased.
And yes, that’s the sad part — these are never really ‘benefit checks’ that you can sign up for… in almost every case I’ve looked at, they’re just stocks which you can buy, and in turn receive dividends from (though to this point in the ad, there’s been no mention of buying anything, just collecting checks). I expect we’ll get some more careful wording as we move along, surely all publishers paid close attention when Zach Scheidt was dinged by the FTC last year for his similarly-themed ads about collecting “Congressional Checks” or “Republican Checks” that implied a secret government benefit program was sending out money.
So we’ll keep that in mind as we wade through the teaser. What else does Pearce say to tantalize us?
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Well, a ways into the ad he finally drops that key “invest” word…
“… the form which allows you to collect payments that average up to $1,569 a month is so simple to understand…
“You can complete it in 90 seconds. Maybe less.
“There’s nothing confusing about it.
“There’s no way you can mess it up.
“Now to be clear, not everyone will get payouts of this size…
“How much you receive depends on how much you’ve got available to invest of course.”
Ah, yes… no free money. Dang it.
So this is about buying a stock of some kind and getting income from that, no surprise. What do we learn about which stock?
“… this ‘plan’ has nothing to do with the actual Social Security fund.
“When you submit the “membership form” you’re joining forces with a private sector company that has one of the most unique financial relationships ever formed with the U.S. Government.
“I’m not exaggerating.
“Unlike outfits who provide overlooked ‘everyday’ services like internet access, electric, or even garbage collection…
“The company behind the ‘plan’ I’m sharing with you today provides a resource so immense, expensive, and time-consuming to control…
“The folks in Washington paid them more than $149 million last year to oversee it.”
And then we throw in the “legal requirement” that you be sent this income…
“When you become a member of this company’s ‘plan’ it is legally obligated to pay you a share of its profits.
“And since it has dozens of contracts with the U.S. General Services Administration, which represents federal agencies like the two that siphon at least 31.2% from most Americans paychecks:
“The Internal Revenue Service (IRS) and the Social Security Administration (SSA)…
“As soon as you’re accepted into this ‘plan’, you’ll immediately become eligible to ‘recoup’ MORE of the tax money the government takes from you.”
Ah, so now we know where we’re headed — this is another of the ‘be the government’s landlord!” teases, of a type that was so popular five or ten years ago. Ads that tease about payments being “legally guaranteed” are essentially always about REITs — those are Real Estate Investment Trusts, which are pass-through entities that were designed to make access to real estate investing more accessible to individuals.
REITs in their simplest form own buildings and collect rent from their tenants, and they get to avoid federal taxes as long as they send 90% of their pre-tax income to shareholders in the form of dividends. So yes, dividends are required by law… but only if the company makes money. In practice, almost every REIT pays out far, far more than is required by law, and if they don’t make a profit or have a bad year it’s not unusual for them to pause the dividend or reduce it — there’s no law against that.
Here’s what Pearce says about this particular opportunity:
“I can’t promise you this ‘plan’ will continue paying money out hand over fist…
“You know the drill by now—past results don’t guarantee future performance.
“But after spending nearly $30,000 of my company’s money—and months of my time—researching this situation…
“I simply don’t see much in the way of downside.”
And one more hint about which one he’s teasing here:
“Last year the payouts totaled a staggering $105,868,000.
“Plus, since there’s little chance of government spending ever shrinking…
“I fully expect these payouts will continue to grow….
“This opportunity is so simple to become a part of…
“All you need to join is internet access and about $30 in your investment account.”
So what’s the story here? Pearce is again teasing a stock that he has pitched many times — a blast from the past, really. It used to be called Government Properties Income Trust (GOV), but about 18 months ago it went through a “rescue” merger with a different RMR-managed REIT to form Office Properties Income Trust (OPI), a (mostly) office building-owning REIT that still has a heavy reliance on government tenants but is no longer entirely government-focused. Here’s how they describe themselves:
“Office Properties Income Trust (Nasdaq: OPI) is a REIT focused on owning, operating and leasing buildings primarily leased to single tenants and those with high credit quality characteristics like government entities.”
And that transition was a really, really ugly one — partly because GOV had built itself up and sold itself as a high-yielder for years, getting too much in debt and paying out a dividend that they couldn’t afford… so the merger was also used as occasion to dramatically slash the dividend payout. When that happens, REITs almost always get clobbered — they are, after all, primarily owned because of the dividend income they provide &