by Rhonda Perkins, Attorney, Division of Marketing Practices, FTC
The FTC and its law enforcement partners announced actions against several income scams that conned people out of hundreds of millions of dollars by falsely telling them they could make a lot of money. One of those scams was 8 Figure Dream Lifestyle, which touted a “proven business model” and told people they could make thousands of dollars in a couple of weeks if they paid to join the program. The FTC says those income claims were false. Customers paid between $2,395 and $22,495 to get started, and many took personal loans or racked up credit card debt to buy in. Approximately 94% of those customers lost money, with losses averaging almost $10,500 per person. That’s equal to two months of take-home pay for someone making the median household income.
FTC economist Devesh Raval matched the addresses of the 8 Figure Dream Lifestyle customers to U.S. Census Bureau data to learn how the scam impacted different communities. He found that the percentage of customers who lost money and live in zip codes that skew older (median age of 55 or above) was 43% greater than their share of the population. In other words, they were over-represented in the 8 Figure Dream Lifestyle customer database.
Raval did a similar study of several cases the FTC has brought against other income scams. The analysis showed that these income scams affected different communities at different rates. Where the average loss to scams was more than $500, more of the people affected tended to live in zip codes that skewed older. Where the average loss to scams was less than $500, more of the people affected tended to live in zip codes with a majority Black population.
Savvy scammers know that many of us want financial freedom or to be our own boss. But as FTC cases show, many of these so-called opportunities are money-losing propositions. That’s why it pays to learn how to recognize these scams. If you’re tempted by an opportunity like this, read When a Business Offer or Coaching Program is a Scam. It might save you from losing hundreds – or even thousands – of dollars. Share it in your community to help others recognize these scams. And if you see a scam like this, tell the FTC at ReportFraud.ftc.gov.