$12.5B
FTC-reported fraud losses in 2024
FTC says consumers reported losing $12.5 billion to fraud in 2024.
employee retention credit scam
Aggressive promoters convince businesses they qualify for the Employee Retention Credit when they do not, charging large upfront fees and filing fraudulent claims that trigger IRS audits and penalties.
“tax refund scam”
↑ 204%Key indicators
Usually targetsSmall business owners
Often hitsSmall business owners
Common regionUnited States
Last updated2026-04-04
Estimated impact
$1.4K
median reported loss
Typical range$90 – $9.0K
Recovery rate~15%
Scam breakdown
1
Promoters aggressively market ERC services through robocalls, ads, and social media, claiming virtually every business qualifies for tens of thousands of dollars in credits.
2
They charge 25-50% contingency fees, fabricate eligibility documentation, and file amended payroll returns on behalf of the business.
3
The IRS later audits the claim, denies the credit, and the business owes back the full amount plus penalties and interest — while the promoter has already collected their fee.
What to do first
Consult a trusted, independent tax professional about ERC eligibility before engaging any promoter.
Related terms
ERC mill scamfake ERC promoterTax season scamsPhoneSurgingSmall business ownersEntrepreneursNonprofitsSmall business ownersCreators and online sellersRetirees and seniorsUnited StatesERC mill scamfake ERC promoter
Real-world example
How this scam plays out in practice
Based on reported patterns. Names and details are illustrative.
The setup
Rebecca, 45, a small business owners, encountered what appeared to be a legitimate tax season scams situation while using Phone. Promoters aggressively market ERC services through robocalls, ads, and social media, claiming virtually every business qualifies for tens of thousands of dollars in credits.
Step 2
What happened next was calculated: They charge 25-50% contingency fees, fabricate eligibility documentation, and file amended payroll returns on behalf of the business.
Step 3
The pressure escalated quickly: The IRS later audits the claim, denies the credit, and the business owes back the full amount plus penalties and interest — while the promoter has already collected their fee.
The outcome
Rebecca realized something was wrong when promoter claims every business qualifies for erc regardless of circumstances. By that point, significant damage had already been done — money sent, personal information shared, or trust exploited.
The lesson
Consult a trusted, independent tax professional about ERC eligibility before engaging any promoter. Rebecca's experience shows why promoter claims every business qualifies for erc regardless of circumstances and large contingency fees (25-50% of the credit) with aggressive cold outreach are the clearest early warning signs.
How to identify it
- Promoter claims every business qualifies for ERC regardless of circumstances
- Large contingency fees (25-50% of the credit) with aggressive cold outreach
- Promoter refuses to explain the eligibility criteria or sign the tax filing
- Pause before paying, clicking, or sharing information. Scammers rely on speed.
- Verify the sender, company, or agency using a phone number or website you already know is legitimate.
- Treat secrecy, urgency, and off-platform payment requests as strong scam signals.
What to do now
- ✓Consult a trusted, independent tax professional about ERC eligibility before engaging any promoter.
- ✓Use the IRS ERC eligibility checklist at irs.gov/erc and be wary of anyone who guarantees qualification.
- ✓Report ERC scams to the IRS using Form 14242 or by calling the IRS Return Preparer Office at 1-877-330-2677.
What to save before reporting
- ✓Save the message, profile, phone number, email, or URL that was used.
- ✓Keep payment confirmations, receipts, and account alerts before you dispute or delete anything.
- ✓Write down the timeline while the details are still fresh.
- ✓Save the full chat or call log before blocking the sender so the reporting path still has the original context.
How big is this problem
You are not alone — this scam affects millions of people.
These numbers come from government agencies and official reports. If you have been affected, know that this is a widespread problem — not something that only happens to careless people.
FTC 2024 fraud losses
Imposters
Most common FTC fraud category in 2024
FTC says imposter scams remained the most commonly reported fraud category in 2024.
History and evolution
- This scam family tends to persist because the social-engineering pressure works even when the exact scripts, platforms, and payment methods change.
- The specific packaging evolves over time, but the core pattern usually stays the same: create urgency, control the channel, and push action before verification.
- The IRS placed ERC scams on its Dirty Dozen list for three consecutive years and announced a moratorium on processing new ERC claims in September 2023 due to widespread fraud, with over 1 million questionable claims identified.
Recovery and follow-up
- ✓Save the messages, receipts, account alerts, and transaction details before you block or delete anything.
- ✓Report the scam through the official platform or government channel that best matches where it happened.
- ✓Tell close contacts if a phone or text scam used your identity, so scammers cannot reuse the same story against people around you.
- ✓Consult a trusted, independent tax professional about ERC eligibility before engaging any promoter.
- ✓Use the IRS ERC eligibility checklist at irs.gov/erc and be wary of anyone who guarantees qualification.
Why this pattern keeps working
Even when the story changes, most scams still use the same pressure pattern: urgency, authority, and a request to move money or data fast.
The IRS placed ERC scams on its Dirty Dozen list for three consecutive years and announced a moratorium on processing new ERC claims in September 2023 due to widespread fraud, with over 1 million questionable claims identified.
IRS Dirty Dozen Tax Scams 2025, IRS IR-2023-169
Where to report it
If you have been targeted by this scam, reporting it helps authorities track the pattern and protect others. United States has dedicated agencies that handle fraud reports.
ReportFraud.gov
Federal Trade Commission
Central U.S. consumer fraud reporting portal.
File an IC3 complaint
FBI Internet Crime Complaint Center
FBI portal for internet-enabled crime reports.
Start identity theft recovery
IdentityTheft.gov
Official U.S. identity theft recovery plan builder.
Explore further
Understand the bigger picture
Who is most at risk
Who this scam targets
Primary targets
Small business owners, Entrepreneurs, Nonprofits
Geographic concentration
United States
Primary channel
Phone — Tax season scams
Why this group is vulnerable
Small business owners are particularly vulnerable because this scam exploits trust in familiar brands, authority figures, and time-sensitive decisions. The rapid increase in reports suggests that awareness among this demographic remains low.
Sources and methodology
How we verify this information
OpenScam tracks scam patterns using a combination of government consumer protection databases (FTC, IC3, Action Fraud), platform-specific fraud reports, and verified consumer complaint data. Each entry is cross-referenced against at least two independent sources before publication.
Severity ratings are based on financial impact potential, reversibility of damage, and volume of reports across multiple reporting channels. Trend velocity reflects the rate of change in report volume over the most recent 90-day window.
This page was last verified on 2026-04-04. Red flags, recovery steps, and reporting resources are reviewed quarterly against current agency guidance.
Evidence and indicators
- The IRS placed ERC scams on its Dirty Dozen list for three consecutive years and announced a moratorium on processing new ERC claims in September 2023 due to widespread fraud, with over 1 million questionable claims identified.
Source notes
- IRS Dirty Dozen Tax Scams 2025, IRS IR-2023-169
Frequently asked questions
Common questions about employee retention credit scam
How does the employee retention credit scam work?+
Promoters aggressively market ERC services through robocalls, ads, and social media, claiming virtually every business qualifies for tens of thousands of dollars in credits. They charge 25-50% contingency fees, fabricate eligibility documentation, and file amended payroll returns on behalf of the business. The IRS later audits the claim, denies the credit, and the business owes back the full amount plus penalties and interest — while the promoter has already collected their fee.
What are the warning signs of employee retention credit scam?+
Promoter claims every business qualifies for ERC regardless of circumstances Large contingency fees (25-50% of the credit) with aggressive cold outreach Promoter refuses to explain the eligibility criteria or sign the tax filing
What should I do if I encounter employee retention credit scam?+
Consult a trusted, independent tax professional about ERC eligibility before engaging any promoter. Use the IRS ERC eligibility checklist at irs.gov/erc and be wary of anyone who guarantees qualification. Report ERC scams to the IRS using Form 14242 or by calling the IRS Return Preparer Office at 1-877-330-2677.
Who is most at risk for employee retention credit scam?+
This scam primarily targets Small business owners, Entrepreneurs, Nonprofits. It is most commonly reported in United States and typically appears on Phone.
Is employee retention credit scam getting worse?+
employee retention credit scam is currently surging — reports are increasing rapidly. It has been reported across US. Last updated 2026-04-04.
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Help someone avoid this scam.
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