FTC’s “Operation Income Illusion” Targets Get-Rich-Quick Scams

Kati Daffan, left, and Rhonda Perkins are attorneys in the Federal Trade Commission’s Division of Marketing Practices.

By Mark Hedin, Ethnic Media Services

In the midst of the deadly COVID-19 pandemic, criminals are brazenly floating “get-rich-quick” schemes to fleece unsuspecting people seeking financial security for themselves and their families. Speaking at a mid-December ethnic media conference call, the Federal Trade Commission issued urgent warnings that people need to be on their guard to avoid being robbed.

Kati Daffan and Rhonda Perkins, two lawyers in the FTC’s Division of Marketing Practices, spotlighted a variety of scams promoted in advertisements online or in TV, radio and newspapers and even within religious communities.

In a year’s time, Daffan said, there was a 70% increase in this kind of crime. “In the first nine months of 2020 alone,” she said, “people reported losing at least $50 million.”

And those victims are just the ones who came forward. Most people don’t, Daffan said, so “it’s a tiny fraction of what’s going on in the marketplace.”

To combat the scams, the FTC has launched “Operation Income Illusion.”

Both speakers urged everyone to contact the FTC with any suspicions. You can do so at ReportFraud.ftc.gov, or ReporteFraude.ftc.gov or by phone at (877) 382-4357. The FTC receives thousands of reports every week, Perkins said, making individual responses difficult to guarantee, but the reporting is a key driver of both domestic and international enforcement efforts. “It’s a real public service for people to let us know what they’re seeing,” she said. Besides alerting ethnic media directly, the FTC has posted examples of criminal schemes and tips about how to protect yourself from being victimized on its website in more than a dozen languages: English, Spanish, Chinese, Korean, Vietnamese, Tagalog, Amharic, Arabic, Dari, French, Russian, Haitian Creole and Somali.

New in 2020 are COVID-related schemes. The FTC has seen phony cures, phony vaccinations, phony home test kits, and phony research schemes seeking people’s personal information. Now, with real vaccinations starting to become available, the FTC expects new scams and is warning people not to pay out of pocket, put their names on lists, pay for early access, or provide a caller with Social Security or bank account numbers to get a vaccine.

Some scammers mimic traditions from specific communities. One type of ripoff Operation Income Illusion is fighting are savings clubs, modeled after West African and Caribbean “sou sous,” in which people who know each other will pool their money and take turns getting a payout. In the Filipino community, the name is “paluwagan.”

Another is phony coaching deals, where victims pay for things like real estate seminars, or help in making money on the stock market or online selling.

Investment scams have been the most costly, but the most common are the work-from-home propositions, which sometimes include the victim getting a check in the mail. In these, the fraud is only revealed some time later, after the victim has sent a portion of that money back, or bought and distributed products or gift cards, only to find that the check to pay for them ultimately bounced.

“It’s incredibly important to watch out for any kind of money-making opportunity that involves putting money in and recruiting other people to join. Those people are likely to get hurt,” Daffan said.

Many scams are targeted to specific ethnic communities, such as Moda Latina, which advertised that you could make big money working from home selling jewelry and other luxury products. Victims were sometimes threatened that if they didn’t have a money order ready when a delivery driver showed up with the merchandise, they could be reported and face severe consequences.

But when the boxes were opened, the contents were far from luxurious: shoddy, not fit to be resold, not even worth the cost of the initial purchase.

Some con artists set their sights on specific groups, such as the “Raging Bull” investment scam that targeted seniors, or MOBE, a scam in 2018 that robbed students and veterans of $300 million before it was shut down.

Then there are “pyramid schemes.” The FTC has identified a few by name, such as: “The Circle Game,” “Blessing Loom” and “Money Board.”

The FTC works with numerous law enforcement agencies in pursuing scam thieves, both domestically and internationally. In some cases, it can recover some of the money victims have lost, but Perkins advised that the better strategy is to avoid being scammed in the first place.

If you’re concerned about the wisdom of making a deal someone is offering you, she said, do some research on the company, its reputation, a record of complaints against it.

“Do your research, check out that company’s reputation and talk to other people, people you trust in your community,” Perkins said.

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