More than 50 enforcement actions taken in ‘Operation Income Illusion’
By: Jennifer Mills
On Dec. 14, the Federal Trade Commission (FTC), along with 19 federal, state, and local law enforcement partners announced a nationwide crackdown on “scams that target consumers with false promises of income and financial independence,” which, they say, have been particularly rampant during the pandemic.
The regulatory agency initiated four new enforcement actions and one new settlement alleging deceptive income claims in violation of the FTC Act and noted that these actions are part of its broader initiative “Operation Income Illusion,” intended to dramatically increase claims enforcement.
According to officials, the FTC is actively searching out false income and financial independence statements from operators of work-from-home scams, pyramid schemes, coaching courses and other targeted businesses.
The FTC’s analysis of its complaint data from the first nine months of 2020 indicate that consumers reported losses of $150 million to such scams.
Andrew Smith, director of the FTC’s Bureau of Consumer Protection, says, “Scammers are preying on the unemployment and anxiety arising from the pandemic by making false promises of big income working from home.”
The four new actions are against the following companies.
- Moda Latina allegedly targeted Latina consumers using false claims that offered consumers the chance to “have your own business and earn up to a thousand dollars per week” as well as threatened consumers.
- Digital Income System allegedly marketed a business opportunity scheme of selling memberships for between$1,000 and $25,000 and promised big payoffs to consumers.
- RagingBull.com sold online investment-related services that it wrongfully claimed would give consumers an advantage on the stock market and pay consistent profits.
- Randon Morris and his network of companies tricked consumers into participating in a telemarketing fraud scheme and lured them into purchasing work-from-home business opportunity programs by falsely claiming participants could earn hundreds of dollars a day.
In its announcement, the FTC said the operation included more than 50 enforcement actions from the FTC and other regulators. Other agencies involved and reporting information include the Securities and Exchange Commission, the Commodity Futures Trading Commission, the U.S. Attorney’s Office for the Eastern District of Arkansas, and state and local agencies in Arizona, Arkansas, California, Florida, Indiana, Maryland, New Hampshire, Oregon, and Pennsylvania.
According to Brian Bennett, the vice president of government affairs and policy at the Direct Selling Association, no direct selling or network marketing companies were the subject of these enforcement actions.
Even so, the announcement is a reminder that income and business opportunity claims are a priority for the FTC, particularly in COVID-19 times when regulators are concerned that companies are taking advantage of consumers’ financial instability and/or unemployment.
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By: Jennifer Mills
We are demonstrating to
the FTC and the regulatory authorities that we prioritize compliance in our companies.”
—Brian Bennett, Vice President of Government Affairs and Policy, DSA
Last summer the Direct Selling Association (DSA) began work on a comprehensive compliance program which will be available to both member and non-member companies.
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