FTC Refunds $542K to Consumers Scammed by Digital Income System

The Federal Trade Commission will send 1,064 checks totaling over $542,000 to consumers harmed by a fake investment scheme, an agency press release said Wednesday (June 1).

Called the Digital Income System, the scam told consumers that if they sold memberships in the defendants’ programs, they’d get big sums of money.

The FTC sued Digital Income System in 2020 as part of the Operation Income Illusion sweep.

The scam was based in Florida, and told people they’d be able to earn between $500 and $12,500 per sale, with “huge commission checks” every time someone closes a sale. But the complaint alleges that the majority of people who paid the company didn’t earn much of anything, with many of them earning nothing at all.

See also: FTC: Financial Education Services Ran $213M Pyramid Scheme

PYMNTS wrote that the FTC has taken action against other such alleged scams lately, including against credit repair company Financial Education Services, which it accused of running a $213 million pyramid scheme.

The report said the company has been shut down for now by a federal court because of the allegations that it was preying on those with low credit scores.

Financial Education Services, the report said, also does business as United Wealth Services and had been operating since 2015 telling people it could remove negative information from credit reports and raise credit scores by “hundreds” of points. It charged as much as $89 per month for its services.

According to the FTC, the company’s methods rarely work and were in some cases lowering credit scores, and the company also encouraged people to become “agents” with the company, under promises they could earn over $1,000 a week and bonuses in the tens of thousands.

“The compensation structure for the scheme has hallmarks of a pyramid scheme, with increasing levels of compensation and titles based on the number of members recruited, and an emphasis on the importance of recruiting new members,” the FTC said in the release. “Few, if any, consumers make the income promised, and many consumers lose money as agents.”