NCPW: Lottery and Sweepstakes Scams

By phone, e-mail or good old-fashioned snail mail, the message is similarly enticing: You’ve won! Something Free! Congratulations!

But…there’s a caveat. To claim your prize, you’ll need to fork over a credit card number. Or maybe a checking account number will suffice. In other cases, scammers may ask for a payment through Western Union. (They’ll send you a check to cover costs—a check that, unbeknownst to you, will bounce.) Regardless of the modus operandi, the outcome is often the same: You’re out your investment, oftentimes without a clue as to who perpetrated the fraud.

According to the Better Business Bureau, “lottery/sweepstakes” scams ranked among 2009’s top 10 rip-offs. The good news: It’s pretty easy to protect yourself from lottery scams. Keep in mind that you must have first played the lottery in order to win the lottery. If you don’t remember buying a lottery ticket or otherwise entering the contest, it’s safe to say the lottery winnings are bogus. (The U.S. Postal Service points out that it’s illegal to buy or sell tickets across the U.S. border. So unless you played a lottery overseas, expect your foreign lottery winnings to be a scam.)

A sweepstakes, on the other hand, doesn’t require initial consumer participation. If a sweepstakes asks for  an up front payment to claim a prize, it’s probably a scam. While scammers have been known to invent sweepstakes or lottery companies wholesale, the BBB points out that they’ve masqueraded as legitimate companies like Reader’s Digest and Publishers Clearing House to engage in the age-old ploy. Just recently, a Los Angeles Times columnist recounted his run-in with a scammer promising a free Caribbean cruise.

The bad news: Money lost in a lottery or sweepstakes scam is more difficult to recover than in situations where scammers have opened up new credit card accounts or taken over existing accounts in a person’s name. Banks and credit unions will typically reimburse fraudulent charges associated with such identity theft. Lottery and sweepstakes scams are more difficult to resolve because the consumer volunteered the money to the scammer, albeit under fraudulent terms. To make matters more complicated, sometimes consumers ensnared by such scams will bounce checks, having falsely assumed their outgoing payments were going to be covered by what turn out to be the scammer’s bad check to them.  

When promised something for nothing, cliché should be your ally. Some things are, indeed, too good to be true.

IdentityTheft911.org joins a group of federal, state, and local government agencies and national consumer organizations to launch the 12th annual National Consumer Protection Week (NCPW), March 7-13, 2010.

NCPW 2010 — Dollars and Sense: Rated A for All Ages — highlights the importance of using good consumer sense at every stage of life – from grade school to retirement. The purpose of NCPW is to promote free resources to help people protect their privacy, manage money and debt, avoid identity theft, understand credit and mortgages, and steer clear of frauds and scams.

IdentityTheft911.org will publish an article every day this week dedicated to heightening consumer awareness surrounding the more pressing identity theft issues at various life stages.

Visit Identity Theft 911’s resource center and www.consumer.gov/ncpw for more consumer tips.