You’ve won a new car or a dream vacation or cash - in a contest you never entered! If this sounds too good to be true, you’re right.
In 2016, the Better Business Bureau received more than 2,300 sweepstakes/lottery/prizes scam reports in BBB Scam Tracker. Types of scams reported were foreign lotteries, fake Publisher’s Clearing House letters and phone calls regarding trips just to name a few. Publisher’s Clearing House and the Federal Trade Commission previously issued a warning for consumers not to fall victim to the PCH scam because the organization doesn’t require winners to pay any fee. The BBB serving Central East Texas reminds consumers never to pay in order to receive prize winnings.
Any letter or email from a lottery or sweepstakes that asks you to pay taxes, fees, shipping or insurance to claim your prize is a scam. Keep in mind that if you deposit a bogus check or money order into your account, you could be held responsible for any money you spend or send to anyone else once your financial institution confirms that the check or money order is counterfeit.
Here is how the scam works.
You receive an email or phone call, allegedly from a contest organizer, informing you that you’ve won a prize. To claim your winnings, you must first pay taxes, shipping costs or other fees. You are urged to send the money by wire transfer, or buy a prepaid debit card and share the number and PIN with the “contest organizer.”
In another version, you receive a letter saying you’ve won a jackpot, often from a foreign lottery (by the way, it is illegal in the U.S. and Canada to enter a foreign lottery by phone or mail). The letter includes a seal or other insignia to make it look authentic. There is even a check to cover the taxes on the winnings. You are instructed to deposit the check into your bank account and wire or use a prepaid debit card to send the “taxes” to a third party. The check is a fake, and you are out the money.
The BBB offers some tips to avoid a sweepstakes scam:
- Never pay upfront fees to claim a prize. No legitimate sweepstakes company will ever ask you to pay a fee or buy something to enter or improve your chances of winning. That includes paying “taxes,” “shipping and handling charges” or “processing fees” to get your prize.
- Shred the check. Be aware that a check can bounce after your bank allows you to withdraw cash from the deposit. Even if a bank representative tells you that a check has “cleared” you can’t be sure it won’t be detected as a fake weeks later. One thing you can be sure of is that you will be on the hook for any funds drawn against the amount.
- Play to win. A notification that you have won a prize in a contest you do not remember entering should be a red flag. If you do regularly enter contests or sweepstakes, make sure you keep track of your entries so you can easily check to see if you have actually entered a contest that contacts you.
- Be suspicious of irregular communication. Real sweepstakes will not notify you via text or bulk mail. They will not send a check in the mail without first confirming with you and you won’t be notified that you are a winner and have to respond or act within 24 hours to collect your prize.
For more tips on how to be a savvy consumer, go to bbb.org. To report fraudulent activity or unscrupulous business practices, call the BBB Hotline: 903-581-8373 or report it via BBB ScamTracker.