Lottery and Sweepstakes Scam Alert: Red Flags Experts Say Could Save Your Money and Identity
Scammers use fake lottery and sweepstakes prizes to steal money—here's how to spot them
Picture this: You open a letter in the mail and discover you’re the winner of a brand new vehicle! Before you celebrate this exciting prize, however, you may want to be on guard. This could be a scam designed to steal your hard-earned money. Luckily, you can protect yourself just by understanding the red flags of lottery and sweepstakes scams. Keep reading to discover what experts want you to know, including the simple steps that will keep you and your loved ones safe.
What are sweepstakes and lottery scams?
Finding out you’ve won a big prize or large sum of money can seem like a dream come true! That euphoric feeling can’t be beat, which is why scammers are now targeting people with fake promises of prizes.
“According to the FTC [Federal Trade Commission], lottery and sweepstakes fraud are all too common, representing the third most reported type of scams, costing consumers hundreds of millions of dollars over the past few years,” says consumer advocate and privacy expert Adam Levin, former director of the New Jersey Division of Consumer Affairs and cofounder of Credit.com.
Officials everywhere are now warning about fraudsters who are posing as individuals claiming to represent Publishers Clearing House, the Mega Millions jackpot and other sweepstakes. They tell victims they have won big, but there’s one catch: The “winners” must pay taxes or a fee to claim a prize.
In reality, there are no winnings—and that money you’re being told to pay is going right into the scammers’ pockets.
The step-by-step playbook scammers use to target victims
The method of communication for these scams can vary, with some people receiving letters in the mail and others being contacted via social media. But all share something in common: a notice that they’ve won a car, a jackpot, a vacation or another huge prize.
If it happens to you, of course you’d be excited to collect your winnings—and that’s exactly what scammers are counting on. Here’s where they try to trick you: The letter or message will explain that you first must pay the necessary taxes, insurance or fees.
Often, the instructions will say this money needs to be sent via gift card, wire transfer, crypto or prepaid debit cards. These hard-to-track payment methods benefit criminals while making it nearly impossible for you to recover your money.
In other cases, you may receive a fake check with the fraudulent letter that’s meant to cover that alleged fee. Eventually the check bounces, the deposit is reversed and the full amount—which is your actual money—is removed from your account.
Adding to the concern? Potential identity theft. Some fraudsters will also manage to get sensitive information, such as your Social Security number, bank account details and copies of your ID by outright asking for these details (insisting it’s needed to receive the prize), or secretly steal them when the bank tries to clear the fraudulent check.
Both of these situations can be devastating, but knowing what to watch for is your best line of defense.
Your action plan if you’ve fallen for a lottery scam
If you’ve been victimized by a lottery scam, first know this: You’re not alone, and you have the power to take control of this situation right now. Here’s exactly what to do.
“If you or folks you know have responded to a lottery scam and sent money or provided sensitive personal information, contact the Federal Trade Commission and law enforcement agencies immediately,” advises Levin. “Freeze your credit and monitor your accounts, especially if you wired the scammer money or provided any sensitive personal information.”
You should also contact your bank or credit card company directly, as they can help if you need to dispute any fraudulent charges.
Another crucial step: “Don’t forget to change passwords regularly and turn on two-factor authentication on any accounts that may have been hit by scammers,” adds law professor and consumer protection attorney Danny Karon, author of Your Lovable Lawyer’s Guide to Legal Wellness: Fighting Back Against a World That’s Out to Cheat You.
How to spot a fake prize notification before you lose money
Lottery and sweepstakes scams can take various forms, but all of them have similar red flags that can indicate you’re being targeted.
The first sign you’ll notice something is wrong? Getting a message or notification that you’ve won a contest that you never entered. But if you’re not sure if you actually entered the sweepstakes, there’s another warning sign that should be on your radar.
“The biggest red flag is when someone asks you to pay a fee, such as taxes, shipping or processing to claim a prize,” shares Karon. “Real prizes are always free.”
You will also likely see some sort of deadline involved with these schemes, such as “the creation of urgency and/or pressure to sign up or accept your ‘winnings,’” explains Levin. “These high-pressure tactics are designed to elicit a near-spontaneous response that can lead you down a path of pain.”
In general, experts say it’s a good idea to question any “win” for which you never signed up. Fraudsters are hoping your excitement about a potential prize will get you to act quickly and send money before you realize what’s going on. But you have the power to outsmart them!
The key? Trust your gut! If something about a contest feels too good to be true, it probably is.
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