Many lottery prize scams look legitimate, but they aren’t.
You don’t remember that you entered the De Lotto Netherlands Sweepstakes Lottery or the Australia Lotto Lottery Inc? Or Spain’s el Gordo Sweepstake (not to be confused with the country’s official el Gordo Lottery, which has been in existence since 1860)? Or some pan-European lottery you’ve never heard of like Alpha Lottery International? That’s because they don’t exist. They’re all examples of lottery prize scams.
Lottery prize scams are a global phenomenon. They are so widespread that el Gordo’s website warns all visitors not to confuse it with the scam:
elGordo.com would like to inform the general public that a number of groups of criminals, of various nationalities, are using the prestige and the commercial names of the Spanish Lottery by fraudulent means in several countries, particularly in countries in the south-west of Asia and the Pacific, and countries on the American continent. They move with ease around the whole world and use mobile telephones, PO boxes, provisional or false addresses (including real addresses of official Spanish organisations), as well as names that bring to mind prestigious institutions (“el Gordo”, “la Primitiva”, “European Lottery Commission”, etc.) They also forge the printed sheets and signatures of various banks.
In order to carry out the fraud, the procedure that is generally followed consists of informing the potential victim that they have been the lucky winner of a substantial prize (even if they have not participated in any draw), although they cannot collect this prize until they have paid an amount going towards the taxes, bank costs, delivery costs or insurance processing, etc. Usually, the fraudster warns their potential victim that the deadline to pay these charges is very soon and that their right to collect the prize is about to expire.
How Do Lottery Prize Scammers Find You?
Lottery prize scammers usually contact potential victims by email, congratulate them on winning and provide them with rather elaborate instructions on how to obtain their money. The emails will inevitably be sent from anonymous Gmail or Yahoo accounts. Free email accounts are a sure sign of a scam. Another red flag is misspellings and poor grammar. And needless to say, if they do not know your name or you never recall having initiated any contact with them in the past it’s guaranteed to be totally phony.
Typical Lottery Prize Scam Scenarios
Most likely, as is the case with many other scams, they will ask you to provide personal details, including a bank account number or credit card number, ostensibly to allow them to pay for the bank transfer and administrative costs. Instead, they will use that information to impersonate you, commit identity theft and make exorbitant charges to your credit card or withdraw your savings from your bank account, or both.
Quite often scammers may suggest depositing your prize in a euro bank account that they will open in your name in Amsterdam (where lottery prize and ‘419‘ scammers are known to congregate). To do so, they’ll tell you that you have to pre-deposit a certain amount of money. Of course, there is no bank, no account and no prize. Any money you send will go straight to the scammers.
Another typical scenario was an email that made its way around the world in the summer of 2020. It was invitation to participate in a supposed lottery being sponsored by Coca Cola that was ascribed to a series of senders: The non-existent ‘Coca Cola Lottery Organisation,’ the ‘Coca Cola Email Draw UK 2020 – Coca Cola Lucky Winner 2020’ and the even the more improbably named ‘Coca cola [sic] assistance programmable promo.’ Recipients were advised that they won £1 million, $1.25 million or even $2.6 million, and were requested to provide personal identification information in order to receive their money.
Even more daring was a mass mailing supposedly sent by Mega Millions, a legitimate consortium comprised by lotteries in 45 states, the District of Columbia and the U.S. Virgin Islands. But it wasn’t. It was fake. A 74-year-old retired schoolteacher from California believed that she had just won $2.5 million and a brand new Mercedes-Benz convertible to boot. Instead she lost $16,000 of her own money that she was told was to cover taxes.
In 2021, a retired couple from North Dakota lost over $89,000 after they were contacted by an outfit calling itself the ‘California Gaming Commission.’ (The name of the actual state agency is the California Gambling Control Commission, and multiple scammers have misrepresented it over the years as a ploy to deceive their victims.) Not only did the couple hand over all their life savings thinking they would wind up with a $1.7 prize, but they also took out a bank loan using their house as collateral in order to raise the entire $89,000 the scammers demanded.
Beware So-Called ‘Release Fees’
In some cases, the scammers invite you to Amsterdam to pick up your prize in person in exchange for a ‘release fee,’ which you will be expected to pay in cash. They’ll then hand over your winnings, but it will be in counterfeit currency, while you paid for it with the real thing. Traditionally, they will ask you to make payment using a money order, wire transfer, international funds transfer, or pre-loaded cards. In recent years, however, scammers have begun to prefer cryptocurrency, like bitcoin. That’s because crypto is the most difficult of all payment types to recover.
As a rule of thumb, no legitimate sweepstakes will ever ask you to pay a fee in advance. And you would certainly never pay any tax to them either. You declare your winnings together with your regular income and you pay tax directly to your national tax authority.
Publishers Clearing House Sweepstakes Scams
No doubt most Americans are familiar with Publishers Clearing House. It is a veteran direct marketing company with a nationwide mailing list that makes it easy to subscribe to magazines. To induce recipients of its mass mailings to sign up for subscriptions, Publishers Clearing House sponsors a sweepstakes and hands out occasional prizes. Anyone can sign up, whether or not you take out a subscription to one of the magazines it offers.
But because Publishers Clearing House is so well known, it’s also a magnet for scammers anxious to piggyback on its wide recognition. Some of these scams, for example, will notify you that you won a prize. All you have to do is pay shipping and handling, insurance, taxes or some other fee before you can pick it up. Others may even send you a check. But before depositing it you have to pay those fees. Either way, the prize doesn’t exist, the money you send them disappears and, of course, you’ll never hear back from them.
In 2021, two residents of Troy, Michigan were called by a Publishers Clearing House Sweepstakes imposter, who told them that they had won the jackpot. All they had to do was pay the tax to get their $2.6 million. But there was no jackpot. They wound up losing $143,955 instead after sending it on to the scammer by post. They would have lost more had the post office not identified their last payment as suspicious.
The Impact of Lottery Prize Scams
Lottery prize scams typically target retirees. The Better Business Bureau’s Scam Tracker found that of the 4,417 sweepstakes and lottery scams reported to it between 2018 and mid-2020, nearly half, or 1,980, came from senior citizens. Their losses amounted to $2.52 million out of a total of $3.1 million. The average loss is $500.
But those statistics only represent the complaints filed with the BBB. The complaints filed with the Federal Trade Commission (FTC) and the FBI document $112 million of losses in 2017, $182.6 million in 2018 and $170.4 million in 2019.
The American Association of Retired People (AARP) notes that these types of scams rank among the FTC’s top five most common scams year after year. And it looks like that will be continuing into the foreseeable future. In the five-and-a-half years ending on June 30, 2020, the FTC received 769,116 complaints with losses reaching $597 million. In one such case reported to have occurred in February 2020, a South Carolina man lost $143,500. He was talked into forwarding the scammers $3,500 as an enabling payment plus two blank cheques, ostensibly to verify his identity. Instead, the scammers used them to cash $140,000, after pocketing the $3,500 they received in advance.
If you think you’ve been the victim of a lottery prize scam, contact the fund recovery experts at MyChargeBack.