Most prize offers and contests are run by reputable marketers and non-profit organizations to promote products and services or to raise money for charitable causes. However, some prize offers in the mail or by phone could end up costing you a lot of money in taxes or service charges. Furthermore, these prizes may never arrive. Con artists may use such prizes to entice consumers to send money to them. In addition to potentially losing money, consumers who fall for their schemes may end up with more promotions in the mail, more calls, and more unsolicited email, also known as "spam".

What Should I Look Out for?

There is a big difference between a fraudulent and a legitimate prize contest. Legitimate prizes are awarded by chance, and contestants do not have to pay a fee or buy something to enter or increase their chances of winning. Under fraudulent schemes, people are usually required to pay something before they can enter into the contest or collect the prize.

Are There Any Laws that Protect the Consumer?

There are some consumer protection laws that help to shield consumers against such fraudulent contests:

  • Solicitations by phone – The Telemarketing Sales Rule protects consumers from fraudulent telemarketers who use prize promotions as a lure. The law requires that the telemarketer tell you:
    • The odds of winning a prize
    • That you do not have to pay a fee or buy something to win a prize or to participate
    • How to participate in the contest without buying or paying anything if you ask for this information
    • What you will have to pay or the conditions you will have to meet to receive a prize
    • Telemarketers may not misrepresent any of these facts, or the nature or value of the prize
  • Written solicitations – The Deceptive Mail Prevention and Enforcement Act protects consumers against fraudulent promotions sent by mail. It prohibits:
    • Claims that you are a winner unless you have actually won
    • Requirements that you buy something to enter the contest or to receive future mailings
    • Mailing fake checks that do not state they are non-negotiable and have no cash value
    • Seals, names, or terms that imply an affiliation with or endorsement by the federal government

What about the "Do Not Call" List?

You can also protect yourself by requesting that your name be removed from mail and telephone solicitation lists. The Telemarketing Sales Rule requires telemarketers to keep a "do not call" list, and calling a consumer who has requested not to be called is illegal, and doing so may result in the telemarketer being subjected to a heavy fine. Under the Deceptive Mail Prevention and Enforcement Act, companies that use direct mail are required to keep a similar list for consumers who call or write to ask that their name be removed from the mailing list. Consumers may also contact the Direct Marketing Association to request their names be placed on its "do not call," "do not mail," and "do not email" lists. Members of the Association agree not to solicit such consumers.

What Should I Do If I Believe I Am a Victim of Fraud?

Possible victims of fraudulent promotions should contact their local postmaster or the U.S. Postal Inspection Service. You can also contact the Direct Marketing Association or the Better Business Bureau.

Do I Need a Lawyer Experienced with Consumer Fraud Issues?

An adept attorney will be able to discuss with you the provisions of the Telemarketing Sales Rule and the Deceptive Mail Prevention and Enforcement Act. A lawyer may also be able to help you in dealing with any government agencies you choose to seek help from.