Sweepstakes and lottery scams resulted in higher financial losses during the COVID-19 pandemic compared to the previous three years, according to new research from Better Business Bureau® (BBB®). Consumers are advised never to pay money to claim a prize. If anyone asks for money before delivering a prize, it is probably a scam.
Sweepstakes and lottery prize scams ranked as the third most common scam reported to BBB Metro New York in 2020. In 2021, as of June 9, there were 108 such scams reported to BBB Metro New York.
“Anybody could fall victim to scammers who dangle the promise of rich sweepstakes or lottery rewards, while trying to rip people off,” said Claire Rosenzweig, President and CEO of BBB Serving Metropolitan New York. “While older people may often be especially susceptible, everyone needs to look at such appeals with a skeptical eye and verify claims before taking any action.”
The research is an update of BBB’s 2018 in-depth investigative , Sweepstakes, Lottery and Prize Scams: A Better Business Bureau Study of How “Winners” Lose Millions Through an Evolving Fraud. Since the study’s publication, there has been a 16% decrease in complaints to the Federal Trade Commission (FTC), the FBI’s Internet Crime Complaint Center (IC3) and the Canadian Anti-Fraud Centre (CAFC). However, financial losses from these types of scams reported to all three agencies rose dramatically in 2020 with the COVID-19 pandemic, with FTC logging an increase of more than 35% in reported dollar losses. The updated research highlights how these scams work and the importance of educating consumers, particularly those who may be susceptible to a specific scam.
Older adults are the primary target for sweepstakes scams
People over the age of 55 continue to be the primary target of sweepstakes, lottery, and prize scams, representing 72% of fraud reports for this type of scam received by BBB Scam Tracker during the last three years. Of the older consumers who were targeted, 91% reported that they lost money. Adults over 55 lost an average of $978 while those 18-54 lost an average of $279, according to Scam Tracker reports.
The confinement and isolation many older people experienced during COVID-19 may have helped fuel the increase in losses. Other factors that may contribute to some older people’s particular vulnerability include mental decline and relative financial stability, as reported in BBB’s 2018 study.
Recent BBB interviews with repeat victims of sweepstakes scams, however, found few to be the stereotypical “frail shut-in” that many people envision,” according to Baker, the author of the 2018 study. Instead, Baker noted that the victims interviewed were ordinary people more interested in using the imagined winnings to help their families or communities than spending it on themselves.
Scammer tactics include impersonation and wide outreach
According to BBB Scam Tracker data, sweepstakes scammers reach out through a variety of channels: phone calls, email, social media, notices in the mail, and text messages. They may impersonate well-known sweepstakes such as Publishers Clearing House or a state or provincial lottery. The “winner” is told to pay taxes or fees before the prize can be awarded. The FTC notes that people increasingly are asked to buy gift cards to pay these fees -- its use is documented further in BBB’s 2021 in-depth investigative study on gift card fraud -- but they also may be asked to pay via wire transfer or bank deposit into a specified account, or even cash sent by mail.
In reality, the prize does not exist, something the people may not realize before paying thousands of dollars that cannot be recouped. However, the harm suffered by lottery fraud victims can far exceed the loss of that money. The losses can put severe strains on family trust, and victims have even committed suicide. In addition, repeat victims may have difficulty ending their involvement in a lottery scam, and they may unwittingly become “money mules” who receive and forward money from other lottery fraud victims.
How to tell fake sweepstakes and lottery offers from real ones:
- True lotteries or sweepstakes don’t ask for money. If someone wants money for taxes, themselves, or a third party, they are most likely crooks.
- You have to enter to win. To win a lottery, you must buy a lottery ticket. To win a sweepstakes or prize, you must have entered first. If you can’t remember doing so, that’s a red flag.
- Call the sweepstakes company directly to see if you won. Publishers Clearing House (PCH) does not call people in advance to tell them they’ve won. Report PCH imposters on their website. Check to see if you have actually won at 800-392-4190.
- Check to see if you won a lottery. If you are told you’ve won a lottery, call the North American Association of State and Provincial Lotteries at or your local state lottery agency to confirm it.
- Do an internet search of the company, name, or phone number of the person who contacted you. Check BBB Scam Tracker to see if other consumers have had similar experiences.
- Law enforcement officials do not call and award prizes. Verify the identity of the caller and do not send money until you do.
- Talk to a trusted family member or your bank. They may be able to help. You also can call your local BBB office for help in identifying a scam.
If you think you have been a target of lottery/sweepstakes fraud, file a report with:
- Federal Trade Commission (FTC), or call 877-FTC-Help
- U.S. Postal Inspection Service has experts to help with chronic sweepstakes scam victims and can be reached at 1-877-876-2455 or uspis.gov
- Senate Subcommittee on Aging Fraud Hotline: call 1-855-303-9470; or aging.senate.gov/fraud-hotline to leave an online request for someone to contact you
- Adult Protective Services: local help at elderjustice.gov for vulnerable or older adult victims
- Canadian Anti Fraud Centre: toll free from the US at 1-888-495-8501
- Western Union: 1-800-448-1492; file a complaint at westernunion.com
- MoneyGram: 1-800-926-9400; report a problem at moneygram.com
- Green Dot: 1-866-795-7597; contact greendot.com
- Facebook: log reports of log reports of hacked or fake profiles
ABOUT BBB: For more than 100 years, the Better Business Bureau has been helping people find businesses and charities they can trust. In 2020, people turned to BBB more than 220 million times for BBB Business Profiles on nearly 6.2 million businesses and Charity Reports on about 11,000 charities, all available for free at bbb.org. There are local, independent BBBs across the United States, Canada and Mexico, including BBB Serving Metropolitan New York, which was founded in 1922 and serves New York City, Long Island, and the Mid-Hudson region. Visit bbb.org for more information.