Individual Insights Newsletter
Take a Savvy Approach to Sweepstakes to Avoid Scams
Hope springs eternal. Everyone wants to believe they have the lucky lottery ticket or win the sweepstakes.
This makes it relatively easy for con artists to run their schemes, especially on the elderly. More often than not, victims will lose hundreds or thousands of dollars before catching on. A recent case from the FBI files is a prime example of the rash of such cons.
Sweepstakes fraud can take several formats. They can range from the simplistic to the complex. Naturally, it helps to be vigilant and to recognize the most prevalent types of scams. Here are four common variations of the scams:
- Persuading you to give away money. This seems counterintuitive because, if you’re a sweepstakes winner, you should be the one getting the money instead of the other way around. Nevertheless, one approach is for the criminal to ask you to send cash under false pretenses.
Typically, someone calls you and tells you that you have won a sweepstakes or contest. To collect your winnings, al lyou have to do is wire them the money need to cover taxes, services fees, shipping costs, or some other concoted expense. The callers don’t want to give you time to thin it over, so they often suggest there is a rush.
With a legitimate sweepstakes win, you don’t have to come up with cash right away. You will likely owe taxes, but you pay the IRS and, possibly, the state.
- Talking you into giving away information. Another scam is attempting to convince you that you won a sweepstakes and ask for your bank account or credit card information to verify your age, identity or some other reason. The crooks promptly try to clean out your accounts.
Bona fide sweepstakes do not need any form of payment identification. There’s no reason to check your income (although your Social Security number, or the last four digits, may be requested).
- Coercing you into buying a product. This scam takes a slightly different approach: The goal is not to rob you but to make it extremely difficult for you to turn down a sale.
A typical example: The con artist calls to tell you that you won a prize — say a trip or new car — but you have to pick it up at a specific location. When you arrive you have to listen to a short presentation where you get the hard sell. In some cases, the caller will mention that you have won one of five prizes.
The first four prizes are fabulous but the fifth one — the one you invariably receive — is a trinket or some other item of little or no value. And that is the one they give you for showing up.
- Stealing your identity. This is a more sophisticated scam. The con artist attempts to trick you into revealing vital personal information — Social Security number, bank accounts and the like — so they can impersonate you. Then they open credit card or bank accounts, arrange loans and possibly even commit crimes
Facts of a Recent Scam
According to a Justice Department news release, Patricia Diane Clark of Sacramento, Calif., pleaded guilty for her role in a half-million-dollar sweepstakes fraud that was run from Costa Rica and targeted U.S. residents. She admitted to conspiracy to commit wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering. This isn’t the only such case on the dockets. Similar scams have resulted in other recent arrests (see right-hand box).
For approximately six years spanning 2007 through 2013, Clark’s co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a substantial cash prize in a sweepstakes. The victims, many of whom were elderly, were told that they had to send money for a purported “refundable insurance fee” in order to collect their prize. Clark picked up the money from the victims and sent it to her co-conspirators in Costa Rica. She also admitted to managing others in the U.S. who were involved in the scheme as well as keeping a portion of the victims’ payments.
Once the victims gave the money, Clark’s co-conspirators contacted them again. At this point, they claimed that the prize amount had increased, because either there was a clerical error or another prizewinner was disqualified. But the victim now had upped the ante to cover the “fees” for the larger prize.
This scheme would continue as long as the victim put up more money. It would not end until the victim ran out of money or discovered the fraud. By then it was too late.
Along with her co-conspirators, the Justice Department says Clark admitted to being responsible for approximately $640,000 in losses to hundreds of U.S. citizens.
Lesson to be learned: Some people are so gun-shy about sweepstakes scams that they never enter contests. But you know whether you have entered a drawing and should not be swayed by a random call. Recognize the warning signs of a scam and don’t be coerced into sending any money to con artists.