116 3rd St SE
Cedar Rapids, Iowa 52401
Would you pay to win a prize?
Sweepstakes scams cost victims
The isolation experienced during the height of the pandemic and the overall persuasive tactics of scammers have lead to big financial losses, especially for older individuals.
According to the BBB Scam Tracker, false sweepstakes and impostors are one of the leading submissions made by the public.
Losses can be very significant with reported payments of over $100,000 to people alleging to be with Publishers Clearing House or other impostors purporting to be awarding huge prizes, including random drawings, grants and lottery proceeds.
A majority of the victims are contacted by phone, email or social media. People over the age of 55 continue to be the primary target of sweepstakes, lottery and prize scams, representing 72 percent of fraud reports for this type of scam received by BBB Scam Tracker.
Of the older consumers who were targeted, 91 percent reported that they lost money. Adults over 55 lost an average of $978, while those between 18 and 54 lost an average of $279, according to Scam Tracker reports.
How scam works
An email or phone caller makes contact to advise a person they’ve “won” a big prize. A luxury vehicle might be involved in the con.
To claim the winnings, taxes, shipping costs or other fees must first be paid by wire transfer, a prepaid debit card, crypto currency or some other, irretrievable payment platform. The “winner” is commonly warned to not share any information with family or friends until the money and car are delivered.
In another version of this scheme, an official looking letter arrives notifying the recipient they’ve won a jackpot, often from a foreign lottery. (It is illegal in the U.S to enter a foreign lottery by phone or mail.)
The letter could includes a seal or other insignia to make it look authentic or might be from a law office. A check is provided to cover taxes or other fees on the winnings.
The instructions then specify the person must deposit the check into a personal bank account and wire or use a prepaid debit card to pay the “taxes.“ The check is fake and will bounce, causing the account holder to pay overdraft fees in addition to the amount the check.
Tips of spotting a sweepstakes scam
- You’ve got to play to win. A notification of a prize in a contest that was not entered is a red flag. Keep track of actual sweepstakes entries; read the fine print and rules for how prizes are claimed.
- Don't pay upfront fees to claim a prize. No legitimate sweepstakes asks for prepayment of “taxes,” “shipping and handling charges” or “processing fees.” Once one payment is made, the scammer inevitably will ask for more.
- Checks will bounce after the bank allows the account holder to withdraw cash from the deposit. A counterfeit check might not be detected until weeks after it is deposited. The account holder will be responsible for any funds drawn against the amount.
- Be suspicious of irregular communication. Real sweepstakes will not notify a winner via text or bulk mail. They will not send a check in the mail or insist you respond within a short period of time to collect a prize.
Bobby Hansen is regional director for the Better Business Bureau Cedar Rapids office. Comments: (319) 365-1190; info@dm.bbb.org.
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