Operation Income Illusion: how to spot an income scam

The FTC's Operation Income Illusion campaign graphic.

People who lost money to income scams in the first nine months of 2020 told the Federal Trade Commission they lost at least $150 million, and the FTC's own cases announced the same year involve alleged injury of over $1 billion. On the day of the announcement the FTC joined federal, state and local partners in Operation Income Illusion, a push to help people recognize and avoid these scams.

The pitch

With record unemployment and continuing financial damage from the pandemic, many people were looking to make ends meet, and scammers were pitching false promises of success and financial security. A typical pitch says you can make a lot of money with little time and effort, for example by working from home or starting an online business. The FTC calls the promise an "income illusion."

Who gets targeted

Scammers sometimes aim at particular communities, and the cases announced that day show that everyone needs to be alert:

• A work-from-home scam reached Latinas through Spanish-language TV ads.
• An alleged investment scam affected older adults, retirees and immigrants.
• A business coaching scam targeted servicemembers, veterans, students and college-age adults.

The FTC also analyzed customer data from some of its cases. Where the average loss was under $500, the people who lost money were 44% more likely to live in majority Black communities.

Four things to do before accepting a business offer

What a scam pitch may sound like, and four steps to take (FTC).

The FTC's four steps (FTC).

1. Take your time. Avoid high-pressure pitches that make you act now or lose out.
2. Be skeptical of success stories and testimonials. Glowing stories and online reviews may be made up.
3. Don't bank on a "cleared" check. If you are told to send some of the money or buy gift cards, it is a fake even if you see the money in your account.
4. Do your research. Search the company's name with words such as "review," "scam" or "complaint."

If you spot an income scam, report it at ReportFraud.ftc.gov.

Sources

• Federal Trade Commission, Joining forces to stop income scams, Consumer Alerts; rewritten in hubnx's own words.