When an 84-year-old Kalamazoo, Michigan man discovered that he had won $2.5 million in the Publishers Clearing House sweepstakes drawing, he was so overcome with excitement that he did the unthinkable [*].
Under the direction of the "lottery officials" tasked with helping him collect his prize money, he wired and transferred more than $70,000 to a new bank account with an unknown third party.
Unfortunately, the entire sweepstakes prize was a fraud, and the scammers walked away with the man's money before he knew what hit him. Police were eventually called to investigate the crime, but the man's family was left in the dark about the fraud for weeks — long after the scammers had absconded.
For too many older adults, the idea of falling victim to financial fraud seems far-fetched. Such swindles, or so they believe, only happen to the young and flighty.
But Federal Trade Commission (FTC) data shows that the largest median losses reported by older adults come from fraud that started with a phone call [*].
How Do Sweepstakes Fraud and Lottery Scams Work?
Sweepstakes and prize scams lure victims by promising an unexpected payday. The award could be a winning lottery ticket or a new car or laptop. But what the sweepstakes scammers do next is what makes it fraud.
Instead of handing over the winnings and going on their way, scammers are notorious for solicitations of funds. They may request thousands in lottery taxes and fees like in the example above; they may ask for gift cards, or request the victim's bank account and credit card number.
What are the most common sweepstakes scams? How do they work?
- Phony direct mail packages
- Phishing emails
- Robocalls and spoofing
- Social media contact
- Gift card scams
- Checks or wire transfers from a lottery
- Government lottery scams
- Foreign lottery scams
- Money mule scams
1. Phony direct mail packages
Bogus direct mail is often easy to spot, but it can also be expertly crafted to look like it's coming from an official source. One infamous designer of fake direct mail profiled by AARP said he used an array of strategies to convince victims that they had just won their ticket to a better life [*].
For example, the scammer used official-looking fonts like Bank Script and Copperplate, and even adorned letters with embossings, seals, and ornate-looking borders.
Currently in prison, the con artist used alluring keywords like "entitlement," "guaranteed," and "100% confirmed” to convince recipients that they had won big prizes. Forged signatures were also included in most of his mailings because they gave the impression that real people were involved.
Of course, fake direct mail only serves one purpose. When victims respond to a giveaway, they're asked to fork over some cash to collect their prizes.
What to do:
If you did not enter a sweepstakes or drawing, you did not win a prize. Take the following steps any time you receive direct mail from an unknown sender.
- If you did enter a sweepstakes, confirm with the sweepstakes organizers on their official website before responding. Also watch out for fake websites.
- Check the postmark on your mailer to see if it was mailed by bulk rate. If so, it's likely that many others received the exact same letter.
- The FTC says to report fraudulent mail to the U.S. Postal Inspection Service (USPIS).
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2. Phishing emails
Phishing emails work similarly to fake direct mail, and they are sent with the same goal. It could be a fake lottery email that claims you have won a big jackpot, or a magnanimous lottery winner wanting to give away some of their winnings.
The end goal is to get your money, your credit card number, or your financial information. Like phony direct mail, phishing emails may appear to come from official sources, with contact information for real people who can allegedly help you collect your prize.
What to do:
- If you receive a phishing email or any online communication that claims you have won a prize, the FTC says not to respond. Instead, report the fraud to the FTC at ReportFraud.ftc.gov.
- Delete the email and mark it as spam in your account (or both). Share a screenshot of the email with friends and family members to help them avoid being scammed.
3. Robocalls and spoofing
Due to burgeoning spam calls around the country, the Federal Communications Commission (FCC) has made combating predatory robocalls and caller ID spoofing a top priority [*].
The agency says consumers receive approximately four billion robocalls per month nationwide, and many aim to bilk consumers of their hard-earned cash or personal information for the purpose of committing identity theft.
According to the agency, you should avoid picking up calls if you don't recognize the phone number. If you answer a call and someone asks you to hit a number or respond with "yes" or "no," the FCC advises to hang up immediately.
"Scammers often use these tricks to identify, and then target, live respondents," the FCC explains. They might also try to use your "yes" as verification to apply unauthorized charges to a bill.
What to do:
- If you receive a scam call, consider filing a complaint with the FCC Consumer Complaint Center. The FCC says you can accomplish this by selecting the "Phone" option and then selecting "Unwanted calls."
- If you're unsure whether a call is legitimate, you can also hang up and call the company back using the number found on its official website.
- Consider registering your phone number with the National Do Not Call Registry, but keep in mind that this may not always help.
4. Social media contact
Scammers are just as likely to reach out to victims via social media as they are through regular mail or email. In fact, hackers and thieves love to target victims through private messages over Facebook, Instagram, Discord, and Twitter.
While numerous types of fraud are perpetrated over social media, scammers are known for telling consumers that they’ve won the lottery but need to pay a fee to claim the prize.
In some cases, thieves ask for cash, although they might also request gift cards to specific retailers or bank account information.
Regardless, you should know legitimate lotteries and sweepstakes will never contact you over social media to inform you about your winnings.
What to do:
- If you suspect a scam, report the social media profile to the social media platform (i.e. Facebook, Instagram, etc.).
- Delete the message and block the sender.
- Tell others (contacts, friends, family members, etc.) about the scam so that they can avoid becoming victims.
5. Gift card scams
Gift card scams abound, although not all of them involve lotteries or other prizes. In fact, the FTC notes that some gift card scams come from fake government officials who claim that you owe taxes or fees and need to make payments with gift cards — while others may come from fake family members or friends supposedly in trouble.
Sometimes, lottery scams and gift card scams collide — you’re asked to pay a fee or other charges to collect your big prize, and the scammers want payment in gift cards because they're nearly impossible to track.
Whatever you do, try to remember this golden rule of gift cards from the FTC: "Gift cards are for gifts, not payments." If someone you don't know tells you otherwise, consider this a red flag.
What to do:
- The FTC says that if you suspect you paid a scammer with a gift card, you should notify the company that issued the gift card right away.
- Keep any receipts or other evidence of the gift card purchase to help document the fraud.
- Also, report the fraud immediately at ReportFraud.ftc.gov.
6. Checks or wire transfers from a lottery
The method of communication for this scam may be regular mail, email, social media, or a phone call, but the gist is the same.
You've allegedly won a big prize of some kind and the company needs your bank account information in order to wire you the money. In other scenarios, you're mailed a check that you can see and touch, along with a request to wire some of the money back to the scammer.
If you're asked for your bank account information, that should raise an alarm. The scammer may be trying to commit identity theft or wipe out your bank account.
Or ff you are sent a check and asked to wire some of the money back to the sender, this is also a sign of fraud. California Department of Justice Attorney General, Xavier Becerra, says that legitimate businesses will never ask you to wire them money, nor will the government [*].
The FTC adds that it can take weeks for your bank to figure out that a check is fake — and, in the meantime, the money you wired to the scammer is long gone.
What to do:
- Be suspicious of any lottery communication that you don't recognize, and especially one that asks you to wire money.
- Never cash a check if you are unsure of its origin.
- If you do wind up cashing a questionable check, report the suspected fraud to your bank immediately.
7. Government lottery scams
In some lottery and sweepstakes scams, con artists pretend to be government officials. Successfully accomplishing this task can make their scheme seem far more legitimate since it's easier to trust the government versus an unknown company.
Some thieves who use government lottery scams to cash in contrive official-sounding names that seem like or could even be a real agency. The FTC says these names might be something like the “National Sweepstakes Bureau,” or even the FTC itself.
However, these scams serve no purpose other than getting you to send money or share private information like your Social Security number (SSN). Always remember that you have to enter a sweepstakes or lottery to win. If you didn't participate, there's no way you have won a prize.
What to do:
- If you suspect a scam like this, do not respond, do not give out any personal information, and do not send any money.
- Report the suspected fraud to the FTC at ReportFraud.ftc.gov.
- If you believe you may have given your personal information to a scammer, go to IdentityTheft.gov to find out which steps to take next.
8. Foreign lottery scams
Some lottery and sweepstakes scams are perpetrated in a foreign country, but that doesn't make them any less dangerous.
As one example, the U.S. Department of Justice recently sentenced a Jamaican national for running a Jamaican lottery prize scheme that lured in elderly Americans with the promise of $1 million in lottery winnings or more [*].
In this particular fraud, the scammer communicated with victims over the phone and through text messages to get them to pay with their own funds in order to collect their prizes. In the end, however, there were no prizes and victims faced substantial financial losses instead.
That said, Jamaica isn't the only country known for its lottery scams — this type of fraud can emerge from anywhere in the world. Regardless of its origin, the end result is always the same.
What to do:
- Ignore or delete all communications regarding overseas lottery winnings for drawings you didn't enter.
- Be suspicious of all overseas communications from people you do not personally know.
- If you suspect that you or someone you know has become a victim of this type of fraud, you can report it by calling this hotline: 1-833-FRAUD-11 (1-833-372-8311).
9. Money mule scams
Money mule scams come in many different forms, yet they all center around some form of illegal activity. Cash, packages, gift cards, and virtual currency are often involved in these scams, and some begin after victims are told that they've won a lottery or sweepstakes.
The scam itself uses electronic transfers to launder money obtained from illicit sources. While the narrative for this scam can vary, con artists aim to convince an unsuspecting victim to move money on their behalf.
As an example, targets could be told that they've won the lottery, but they need to transfer cash to a separate bank account before they can collect their prize money.
Whatever the method or story behind it, the victim ultimately loses money that goes straight to the scammers who are perpetrating the crime.
What to do:
- Stop communicating with anyone who asks you to send or receive money based on the premise of winning a lottery or sweepstakes.
- If you have sent money, notify your financial institution right away.
- Report the communications and all other suspicious activity to law enforcement officials.
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Facts To Remember About Real Contests and Prizes
Lottery and sweepstakes scams can seem like they're coming from every direction, and you need to be diligent if you want to avoid them. Follow these tips to prevent lottery scams and abetting fraudulent sweepstakes companies.
- Real sweepstakes and lotteries require you to enter to win. If you don't enter a specific sweepstakes or purchase a lottery ticket, there's no way you can win. Remember this simple truth anytime someone you don't know tries to tell you otherwise via mail, email, or social media contact. The same applies if someone calls you on the phone about a lottery prize.
- You may receive telemarketing emails and calls. Get in the habit of ignoring calls from any phone number you don't recognize. If you receive a call from a company that you work with, hang up and call back using official contact information found on the company’s website.
- Sweepstakes mailings can’t force you to participate. Remember that it's perfectly okay to discard any sweepstakes or lottery mailing that you don't recognize. No one can force you to reply, and nothing will happen if you ignore the communication.
- Contest promoters have to be transparent. Federal law dictates that contest promoters be transparent. If they call you about a sweepstakes, they are legally required to tell you that entering is free, what the odds are of winning, how you would redeem your prize, and more (per the FTC).
- You will never be asked to pay to participate. Legitimate sweepstakes mailings are required to tell you that there are no charges to participate.
- There’s never a “guarantee” that you’ll win. If you're promised you'll get your prize money right off the bat, particularly if you complete a certain task like sharing your financial information, that's never a good sign. Legitimate lotteries and sweepstakes can only be won by chance.
If You Have To Pay, You Didn’t Win
Scammers use legions of deceptive practices to dupe unknowing victims. When it comes to lottery schemes and sweepstakes scams, the con artists conducting them tell a range of lies to get you to share personal information, send them money that you can’t recover, or both.
Unfortunately, many sweepstakes and lottery scams target individuals who are elderly, or at least 60 years of age or older. With this in mind, make sure to report all potential scams that you encounter to the FTC (and USPIS if perpetrated through the mail).
If you believe your personal information could be at risk, consider signing up for Aura. Aura monitors your SSN and bank accounts 24/7 to catch suspicious activity or signs of fraud. Aura can also proactively secure your information from spam, robocalls, and more.