Sweepstakes scams are fraudulent schemes that attempt to deceive people into believing they have won a prize, cash, or other valuable items.
Scammers typically ask the “winners” to pay taxes, fees, or other expenses upfront in order to claim their prize. In reality, there is no prize, and the scammers are simply trying to trick people into giving them money or personal information.
Victims receive an unsolicited email, phone call, or letter stating they have won a large sum of money in an international lottery. To claim the prize, they are asked to pay taxes or fees, often via wire transfer or prepaid debit cards. In reality, the lottery does not exist, and the scammers take the victims’ money.
Fake Prize Notifications
Scammers send a fake notification via mail, email, or social media, claiming the recipient has won a prize such as a car, electronics, or a vacation. The “winner” is asked to pay shipping or handling fees, taxes, or insurance costs to receive the prize. Once the fees are paid, no prize is ever delivered.
Scammers impersonate legitimate charities, claiming that by donating money, individuals will be entered into a sweepstakes to win valuable prizes. The scammers collect the “donations” but never actually contribute to the charity or award any prizes.
Social Media Sweepstakes Scams
Fraudsters create fake social media profiles, impersonating well-known brands or celebrities, and promise valuable prizes to users who like, share, or comment on their posts. These scams aim to gather personal information or spread malware.
Pre-selected Winner Scams
Victims receive a letter, email, or phone call claiming they have been pre-selected to win a prize. To claim the winnings, they are instructed to purchase a specific product or service or to pay a fee. After making the purchase or paying the fee, the victim never receives the promised prize.
Advance Fee Sweepstakes
Scammers inform victims that they have won a prize but must pay an advance fee, such as taxes or processing fees, to claim it. The scammers may also request bank account information to deposit the prize money. In reality, there is no prize, and the scammers steal the victims’ money or use their personal information for identity theft.
These scams violate consumer protection laws, as they involve deceptive marketing practices and false representations. In the United States, the Federal Trade Commission (FTC) enforces consumer protection laws, and it is illegal to engage in deceptive or unfair business practices.
What Action Has Been Taken against These Companies?
The Federal Trade Commission (FTC) has taken action against sweepstakes scams, including issuing fines, seeking injunctions, and shutting down fraudulent operations. The FTC works with other law enforcement agencies to investigate and prosecute these scams.
- In 2018, the FTC shut down a sweepstakes scam operation known as American Veterans Foundation and the Unlimited Readers Service. The scammers promised cash prizes and other rewards to veterans in exchange for donations. The FTC imposed a $6.8 million judgment against the defendants, which was suspended upon payment of $95,000.
- In 2017, the FTC and the state of Missouri took action against a sweepstakes scam company called Next-Gen, Inc., which targeted seniors with false prize notifications. The defendants agreed to a $30 million settlement with the FTC.
Additionally, states’ attorneys general often take legal action against sweepstakes scammers operating within their jurisdictions.
- In 2018, the New York State Attorney General sued a sweepstakes company called National Magazine Exchange for engaging in deceptive and misleading business practices. The company agreed to a $1.1 million settlement and to reform its marketing practices.
- In 2020, the Florida Attorney General filed a lawsuit against a sweepstakes scam operation known as Heart 2 Heart, which falsely claimed to be a charity organization for veterans and law enforcement. The company was ordered to cease operations and pay restitution to the victims.
Class action lawsuits have also been brought against companies engaging in sweepstakes scams. These lawsuits can provide compensation to victims and help deter fraudulent practices in the industry.
- In 2016, a class action lawsuit was filed against Publishers Clearing House (PCH), alleging that the company engaged in deceptive marketing practices by leading consumers to believe they had won or were close to winning a prize. The lawsuit was settled in 2020, with PCH agreeing to pay $3.5 million and change its marketing practices.
- In 2019, a class action lawsuit was filed against a sweepstakes company called PrizeGrab.com, alleging that the company falsely represented the odds of winning its sweepstakes and used deceptive marketing tactics. The case is ongoing, with the potential for compensation to be awarded to victims if the company is found liable.
How Can I Avoid Sweepstakes Scams?
Here are some tips for avoiding sweepstakes scams:
- Be skeptical of unsolicited emails or phone calls claiming you have won a prize: You receive an unexpected email saying you’ve won a large sum of money in a foreign lottery. Instead of responding immediately, be skeptical and verify the lottery’s legitimacy by searching for information about it online.
- Never pay upfront fees to claim a prize: Legitimate sweepstakes do not require payment to collect winnings. For example, you’re told you’ve won a luxury vacation, but you must pay a “processing fee” to claim your prize. In a legitimate sweepstakes, you wouldn’t be asked to pay any fees to receive your winnings.
- Research the sweepstakes or company before providing any personal information: You come across a social media post offering a chance to win a new smartphone by entering a sweepstakes. Before entering, research the company hosting the sweepstakes and look for reviews or complaints from other participants.
- Keep your personal and financial information private: A supposed sweepstakes representative asks for your Social Security number or bank account details to process your prize. Avoid sharing this sensitive information, as it may be used for identity theft or unauthorized transactions.
- Be cautious about providing bank account or credit card information: A sweepstakes notification instructs you to pay a shipping fee for your prize using your credit card. Instead of providing your card information, consider whether the request is legitimate and if the sweepstakes are genuine.
A consumer rights attorney can help by providing guidance on whether a particular sweepstakes is legitimate and by representing victims in legal actions against scammers. They can:
- Assess the legitimacy of a sweepstakes: An attorney can review the sweepstakes rules, company background, and any related documentation to determine if it is a genuine opportunity or a scam.
- Represent victims in legal actions: If you have been a victim of a sweepstakes scam, a consumer rights attorney can help you pursue legal remedies, such as filing a lawsuit against the scammers or participating in a class action lawsuit.
- Negotiate settlements: In cases where legal action is warranted, a consumer rights attorney can negotiate a settlement with the scammers on your behalf, potentially recovering lost funds or securing compensation for damages.
- Provide legal advice: A consumer rights attorney can offer guidance on how to protect yourself from future scams, inform you of your rights under consumer protection laws, and help you navigate the legal process if you have been scammed.
What Should I Do If I am a Victim of a Sweepstakes Scam?
If you have been a victim of a sweepstakes scam, take immediate action to protect yourself and try to recover any losses. One way to do this is by seeking the assistance of a consumer lawyer through LegalMatch.
First, collect any documentation or evidence related to the scam, including emails, letters, phone numbers, and any receipts or payment records.
Next, contact the FTC or your state Attorney General’s office to report the scam. This can help prevent the scammers from victimizing others and may also provide additional resources for recovery.
Lastly, contact a consumer lawyer. A consumer lawyer can help you understand your legal rights and options for recovering any losses. They can also represent you in court if necessary.
By taking these steps and seeking the help of a consumer lawyer through LegalMatch, you can protect yourself and try to recover any losses from a sweepstakes scam.