Who wouldn’t want to win a dream vacation or thousands of dollars? Scam artists know the answer is everyone wants to be a winner, which is why sweepstakes scams have cost unsuspecting victims $166,000 in 2020. And unfortunately, 80% of the victims involved in these scams were seniors.
What makes sweepstakes scams so challenging is that there are real sweepstake contests that seniors have the chance of winning, and no one wants to miss out on a big win, which is how they quickly get swept up in the excitement.
Sweepstakes scammers contact their would-be victims in various ways such as social media, email, internet pop-ups, phone calls, text messages, and even the USPS. Making things more challenging is that there are numerous sweepstake scam types out there, so it is even harder to weed out the legitimate from the scams.
What’s worse is that after you hand over your money, it is nearly impossible to get your money back. And it isn’t just instant cash these scammers are out to get; they also want to steal your identity so they can open new accounts in your name, giving them an even greater opportunity to steal from you.
Though the FTC is working hard at putting a stop to sweepstakes scams, there are always new scams popping up all of the time. And if you ever get caught up in a sweepstakes fraud, it is vital you report it as soon as possible to the FTC.
However, the good news is if you take the time to learn about the red flags and how to identify and avoid these scams, you are far less likely to become a victim. Read on to learn about the top six sweepstakes scams, what they look like, and how to steer clear of them.
- Payment for the Prize
- Ongoing Entries to Win
- Fake Check Scam
- Bulk Mail Sweepstakes
- Product Purchase for a Chance to Win
- PCH Imposters
Payment for the Prize
The Scenario: You receive a notification you are a winner of a large cash prize, new car, or maybe even a dream vacation. The communication may come in any variety of forms, from a phone call to an email.
However, there is just one small catch in order to claim your prize you need to pay a nominal fee.
The Scam: Paying in advance for a prize is by far the most common sweepstakes scam out there. The scammers will tell you that you need to pay the taxes in advance before claiming the prize; however, remember, in almost every situation where you pay taxes, you will pay directly to the IRS, not the sweepstakes company.
Other fees scammers may claim you need to pay in advance are custom fees, service fees, and shipping and handling.
And one of the top reasons it works is that there is a rare scenario it is legitimate to have to pay a fee in advance, which is true for some vacation sweepstakes. Some vacation prizes require you to pay for a port, hotel, or airport tax in advance; these are the few taxes that are not directly paid to the IRS.
How to Avoid It: First, if it is a sweepstakes company you’ve never heard of, then it’s a scam. Also, if you didn’t enter a contest to win the alleged prize, you know it’s not the real deal.
The best way to avoid a pay in advance scam is to take the time to do the research. Even if the notification claims that the payment is for a travel fee, it is best to err on the side of caution and take the time to research the company before handing over a dime.
Another way to identify these scams is by the payment method they request; if they want you to pay it on a prepaid gift card, wire transfer, or want your bank account number, you know it’s a scam.
Ongoing Entries to Win
The Scenario: You receive a call that you have won a prize, and after you pay the fees, you will receive your winnings. But after paying the requested money, you receive another call asking for more money, maybe for the same prize, or for an opportunity to win a different prize.
The Scam: Scammers know once they find a senior willing to pay a fee for a prize, they likely will get you hooked on the idea of winning even bigger sweepstakes. Some of these scammers may even send you small monetary winnings or prizes to keep the scam going.
These scams have proven so effective that some will go on for months, if not years. And when the senior wants out of the scam, they may receive threats that the scammers will harm that person or their loved ones if they don’t continue to pay. They may even claim they will take legal action against you.
How to Avoid It: Many of these ongoing payment scams originate from Jamaica, so avoid calls from area code 876. Also, just like the pay-in-advance scam, if you didn’t sign up for the contest, you know it’s a scam.
Some of these scams may come in the form of a foreign lottery. However, foreign lotteries no more sell tickets over the phone than domestic ones. So, if someone attempts to sell you a lottery ticket from another country, hang up because it’s a scam.
Never pay upfront for any prize before researching the company. Most scammers will attempt to pressure you into acting now, or you will miss out on your winnings. If it is a legitimate company, the prize will not disappear if you request to call them back after taking the time to learn more about the sweepstakes company.
Fake Check Scam
The Scenario: You receive a letter stating you are the winner of a grand prize, and they have already included a check. To most people, this would seem legitimate. The company isn’t asking for money in advance or even any personal information.
The Scam: After you have “cashed” the check, you receive a call or letter stating that the previous check you cashed was an overpayment of some sort, and they are requesting you send back a small portion of the winnings. Most people would do that to avoid forfeiting the full amount for not returning money that is not theirs.
Sometimes the initial letter will inform the recipient of an intentional overpayment to cover taxes, stating they added the additional money to cover the taxes so you wouldn’t have to, but now they need you to send some of the money back as soon as you cash the check.
However, in a week or two after cashing the check and sending money back to the scammers, the bank contacts the senior and says that the check was a fake and you are now responsible for the fines involved in cashing a phony check. Additionally, the bank may even close your account for cashing a fraudulent check.
How to Avoid It: Don’t cash checks from other people or companies you are not familiar with since you will be the one responsible for any lost money. If you receive a check in the mail, take the time to research where the check is coming from and be sure it is a contest you entered.
It may seem ludicrous to tear up a check, but if you attempt to cash a fake check, you will not be a winner and could lose a lot more than just money.
Bulk Mail Sweepstakes
The Scenario: You get your mail and find a letter stating you are the winner of a fantastic prize. The letter will then instruct you on how to claim your prize.
The Scam: The instructions listed in the letter may include logging onto a website to provide your information so that they can send your prize out immediately. The website may request personal information such as your Social Security number, address, and bank account number.
Or the letter may request an advance payment with instructions on how to send the money.
How to Avoid It: The best way to identify a scam that arrived via the postal service is to check the envelope’s postage. If the postage shows anything less than first-class, it is a scam. A legitimate letter notifying someone is a winner is not going to go out via bulk mail.
Fraudsters use the most economical method possible to contact their unsuspecting victims. And using bulk mail allows criminals to reach out to a large number of people at the same time.
Also, if the letter is not directly addressed to you, its a scam.
Purchase a Product for a Chance to Win
The Scenario: You receive a pop-up notification, email, or letter stating that you can enter to win a big prize if you purchase a specific product. The advertisement will usually say the more you spend, the more entries you will receive.
The Scam: You purchase said product and wait for it and your big winnings to arrive, however after weeks of waiting, nothing arrives. And when you attempt to contact the sweepstakes company, you can’t get through to anyone, or worse, you do, and they sell you more products.
And there are some scams will send you cheap products to get you to try again.
How to Avoid It: Don’t buy products to enter sweepstakes. Most contest entries are free, and if you are told the more you spend, the better your chances, you know it’s a scam.
If you receive a notification via pop-up or email, you shouldn’t click on any links as it may provide a gateway to install malware onto your computer without you knowing. Malware is software that gives criminals access to all of your online information, such as usernames, passwords, and account details.
The Scenario: We have all heard of Publishers Clearing House and can all recognize the PCH envelope, so when one arrives in your mail or if you get a call from the PCH, most of us get pretty excited.
The Scam: Scammers know that seniors are familiar with the PCH sweepstakes, so they will go to great lengths to impersonate them to get your money. Some scammers have the technology to make a phone call look like it is from the PCH on your caller id, which many rely on.
The PCH imposter will request either advance payment for your prize or your account information so that the big prize money can be directly deposited into your account.
How to Avoid It: First, the PCH doesn’t use the phone to notify winners, so if you receive a call, hang up because it’s a fraudster. Likewise, if you receive a letter using bulk mail from PCH, you know it’s a fake. For larger cash prizes, the PCH awards those in person, and for smaller prizes, they will send a letter using overnight express carriers such as UPS, FedEx, or USPS Express Mail.
And according to the PCH website, “Major prize award and SuperPrize winners” are notified using email. Be sure to check the email address to make sure it is from a legitimate address before following any instructions.
Note the PCH does not charge processing fees, special handling fees, or collect taxes, so if the communication you receive requests these payments, you know it’s a fake PCH notification.