What Are Lottery Scams? Protect Yourself From Fraud

Crime

What Are Lottery Scams? Protect Yourself From Fraud
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What Are Lottery Scams? Protect Yourself From Fraud

December 22, 2019

Maybe you get a letter, email or phone call telling you that you won a massive prize, like tens of thousands of dollars, a luxury yacht or merchandise for life. You’re excited and ready for the next step.

However, there’s a catch: there’s a small fee you have to pay, disguised as taxes or shipping fees you need to fork over. You’re required to send cash via a wire transfer, gift cards, or even your bank account information.

Sadly, those who do provide one of the above may have actually fallen for a lottery scam—not only are such scams hey not going away anytime soon, but they’re increasing in scope.

What are lottery scams?

Lottery scams are a type of fraud involving unexpected contact through the mail, a phone call or email suggesting you’ve won a legitimate lottery sweepstakes. The “winner” is typically told to contact the company and then asked to pay some form of fee or taxes in order for the winnings to be distributed, according to the Federal Trade Commission.

The FTC notes that these types of lottery and sweepstakes scams are more pervasive than ever, being the third most common type of fraud reported in 2017.

Related: Beware of Medicare scams: How seniors are targeted

How do lottery scams work?

Lottery scams involve thieves contacting you with a notification that you’ve won a lottery prize. They then get you to send them money in the form of “taxes” or “fees” in order to issue you the prize. Another variation of the scam includes a fake check for your lottery winnings but you’ll need to send cash to cover expenses.

Scammers may contact you representing themselves with an official sounding name—according to the Mega Millions website, some of them will have names similar to existing lotteries or claim to be previous winners from real lottery organizations.

If the scammer is pretending to be a representative from an international lottery, then they’ll simply take your money and not even buy tickets as promised, or if the scammer did, the victims will never see the winnings. If victims give away their credit card information, the scammers may make additional charges.

Scammers cover their tracks by asking you to send funds where it typically can’t be traced—for example, by sending gift cards—or through wire transfers, where it can be hard to have your money returned. Some scammers may ask for your bank account information only to drain the money in it. According to the FTC, the number of victims who reported paying for fraud-based scams with a gift or reloadable card increased to 41,000 in 2018, compared to 28,000 in 2017.

Patricia Vercillo, vice president of operations of the Smith Investigation Agency, said that while the fees may be small, scammers contact people in masses so they can collect quite a bit of money.

“I happened upon a scam where I was to pay a small fee to collect $10,000 which was sent to me in the form of a check,” she said. “If I fell for it, I would have had the money wired out of my account and only find out a few days later that the check was fake.”

Some folks aren’t so lucky. Edna Schmeets, a 90-year old woman from North Dakota, was scammed out of $400,000 of her life savings after being told by thieves she won $19 million from the lottery. Sadly, she may not be able to get all her money back even after the scammers were prosecuted—so far she’s received only $287.

Related: Identity theft check: Uncover if your data may have been compromised

How can I protect myself lottery scams?

Unfortunately, lottery scams aren’t going away anytime soon, so it’s a good idea to remain vigilant to try and protect yourself. Here are some best practices to follow:

  • Double check suspicious communications: Consider using reverse phone or email search services as a potential way to try and ascertain suspicious communications.
  • Understand the law:Remember, it’s illegal for you to play the lottery across borders via the mail or telephone. In other words, don’t participate, even if it’s legitimate because you’ll be doing something illegal.
  • Don’t assume anything: If you’ve been contacted about winning cash or a prize and you haven’t entered or played the lottery, this should be a major red flag.
  • Be wary of paying for lottery winnings: Lottery winnings from legitimate companies will never tell you to pay to receive your prize. If that happens, run far away.
  • Don’t call to verify your identity or receive your prize: If you’re instructed to call to claim your prize, then that number is most likely a scam. Again, use a reverse phone service to try and find out more about who’s behind the phone number.

Read more: BeenVerified Spam Call Monitor: The Rise of Social Security Phone Scams

Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.