FTC Announces “Operation Income Illusion” to Prevent Scams

The Federal Trade Commission has launched a nationwide crackdown on scams that take advantage of the pandemic and current financial crisis. Operation Income Illusion will focus on pyramid schemes, investment scams, bogus coaching courses, work-from-home scams and companies making promises about income opportunities that in truth cost consumers more than they earn.

Since 2016, consumers have reported a loss of more than $610 million to these types of scams, with more than $150 million occurring during the first three quarters of 2020.

“Scammers are preying on the unemployment and anxiety arising from the pandemic by making false promises of big income working from home,” says Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “If someone promises you guaranteed income, but then tells you to pay them, tell the FTC right away so we can work to shut them down.”

The FTC has announced four new actions against:

  • Moda Latina, a luxury accessories and beauty company, who deceptively claimed consumers could “earn up to a thousand dollars per week.” The FTC points to 89% of consumers never placing a second order as evidence of deception.
  • Digital Income System, which allegedly sold business opportunity memberships ranging from $1,000-$25,000 and promised commissions of “up to 50%” of a person’s membership level.
  • RagingBull.com, LLC, which sold stock and options trading services, and promoted “self-made millionaires” and ways to “beat the market.” The complaint alleged against them points to specific testimonials of people earning “$6,500 in 20 minutes.”
  • Randon Morris, a seller of storefront websites, which allegedly used robocalls in violation of the Telemarketing Sales Rule and falsely purported a relationship with Amazon.

The FTC announced one settlement with:

  • 8 Figure Dream Lifestyle, which allegedly targeted older adults with deceptive money-making opportunities. Under the settlement orders, defendants are banned from selling business coaching programs and money-making methods. Nine of the defendants are banned from using robocalls; three of the defendants are prohibited from selling any investment opportunities. Monetary judgments totaled more than $32 million and defendants have surrendered more than $1.25 million in assets.

To further encourage compliance within the industry, the Direct Selling Association (DSA) will be offering a three-part certification program called the Direct Selling Compliance Professional Certification Program (DSCP-CP). This new program will help companies and individuals educate themselves about compliance and risk mitigation strategies in the direct selling industry.