Authorities take notice of scam tide
Consumers have lost $1B to fraud this year
WASHINGTON — Federal and state authorities say they are cracking down on a wave of illegal schemes that have proliferated during the pandemic and prey on the desperation of people who have lost jobs in the outbreak’s economic upheaval.
The scams range from the workfrom-home reselling of luxury products to pyramid schemes that solicit cash and play on cultural norms in immigrant communities and to fraudulent investment rackets promising quick profits.
On Monday, regulators unveiled what they call Operation Income Illusion, a yearlong nationwide law enforcement sweep targeting the scammers. Consumers have lost an estimated $1 billion in the schemes since the start of 2020.
Especially vulnerable targets are seniors and retirees, immigrants, Blacks and Latinos, students and military families.
Losses reported by consumers from the schemes rose to the highest level on record in the first nine months of the year, at more than $150 million, Andrew Smith, director of the Federal Trade Commission’s consumer protection bureau, told reporters in a conference call. Officials estimate that only a small fraction of the burned consumers report their losses to authorities.
“These scammers are taking ad
vantage of a desperate situation to rip money from the hands of those who most need it,” Smith said.
The FTC conducted the sweep along with nine states, federal prosecutors in Arkansas, Arizona and California, several local law enforcement agencies, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.
“There are people out there whose job it is to steal your money,” Maryland Attorney General Brian Frosh said on the conference call.
He said his office is seeing growing numbers of cases involving
affinity fraud, a form of pyramid scheme in which consumers are urged to tap friends, family and members of their church or ethnic community for money in addition to their own payment.
A scam promoting investments in bitcoin was among them, Frosh said. His office also has brought several cases against sellers of phony franchises.
In addition to Maryland, the states participating in the sweep are Arizona, Arkansas, California, Florida, Indiana, New Hampshire, Oregon and Pennsylvania.