BBB study: Sweepstakes, lottery schemes evolve, hurt older victims
A new report by the Better Business Bureau (BBB) says sweepstakes, lottery and prize schemes are devastating victims financially and emotionally with ever-evolving methods. These frauds concentrate on seniors, targeting them by direct mail, cold calling, social media, even text messages and smartphone pop-ups. BBB warns consumers to be on guard against these serious and pervasive frauds and their perpetrators.
The report – “Sweepstakes, Lottery and Prize Scams: A Better Business Bureau Study of How ‘Winners’ Lose Millions Through an Evolving Fraud” – notes these scams bilked $117 million out of half a million Americans and Canadians in 2017 alone, with actual victims and losses likely numbering much higher.
The BBB received 2,820 sweepstakes and lottery scam reports in Scam Tracker in 2017, with a median loss of $500. Seniors are the most frequent target and suffer the largest losses by far in these scams, which the report found commonly originate in Jamaica, Costa Rica and Nigeria.
The report recommends stronger law enforcement efforts on three fronts – in Jamaica, which has seen an upswing in violence related to lottery fraud profits; in the U.S., where law enforcement is urged to step up extraditions and prosecutions of overseas fraudsters operating in the U.S.; and globally, as law enforcement agencies worldwide are encouraged to take steps toward holding deceptive mailing organizations accountable and stopping fraudulent mail.
It also urges Facebook and other social media platforms to take steps to weed out fake, fraudulent profiles and make fraud reporting easier.
“You can’t win a lottery if you didn’t buy a ticket,” said Randy Hutchinson, BBB of the Mid-South president and CEO, “and a legitimate lottery or sweepstakes will never ask its winners to wire money to claim the prize. It’s a shame that these crooks are continually finding new ways to prey on older people who are dreaming of a big win or a financial windfall in their final years.”
One victim, a St. Louis, MO man in his 80s, was told in a 2015 phone call that he had won $60 million. He began sending money to get his “winnings,” as callers insisted that he needed to pay transfer fees and taxes on the money. In multiple instances, he was informed that an armored truck awaited him with the money if he would first pay taxes on the funds. Fraudsters even showed up at his house to collect funds in person. A successful businessman, he did not need the “winnings,” but hoped to donate them to worthy causes such as the university he had attended. Ultimately, he lost nearly $8 million.
Memphis area victims who reported recent sweepstakes or lottery scam attempts to BBB did not send money to the scammers.
One potential Mid-South victim told BBB he got a phone call with a message to call back. “They wanted a $2,500 wire transfer from Wal-Mart as insurance for a promised prize of $2.5 million and a new car.”
He said he knew it was a scam because “Publisher’s Clearing House (PCH) never contacts people by phone because they want it to be a genuine surprise.”
Among the report’s key findings:
- The majority of lottery or sweepstakes scam victims are between 65 and 74 years old. Among that age group, people who recently experienced a serious negative life event, and who expect their income in the near future to remain steady or decline, are even more likely to be victimized.
- Sweepstakes/lottery fraud can strike through many channels – phone calls, text messages, pop-ups on a smartphone’s Internet browser, social media and mailings.
- In 2017, 2,820 individuals reported sweepstakes and lottery scams to BBB Scam Tracker. These reports show a median loss of $500, with wire transfer as the most frequent method of payment.
- Jamaica is a major source of “cold calls” to victims who are told they have won money. Although similar calls come from Costa Rica, the scam has had a major impact in Jamaica, where the amount of money generated by lottery fraud has resulted in gang wars between rival fraud groups, leading to a dramatic spike in violence. More than 95 percent of reported fraud in Jamaica involves lottery or sweepstakes scams.
The report was written by C. Steven Baker, BBB International Investigations Specialist. Baker is the retired director of the Federal Trade Commission’s Midwest Region.
In his role with BBB, Baker is working with an alliance of five BBBs in analyzing and reporting on some of the most pervasive fraud issues that impact American consumers. Studies on puppy scams, tech support scams, and romance scams he authored were met with worldwide media coverage.
BBB offers the following tips for consumers to avoid being caught in lottery or sweepstakes fraud:
- True lotteries or sweepstakes don’t ask for money. If they want money for taxes, themselves, or a third party, they are most likely crooks.
- Call the lottery or sweepstakes company directly to see if you won. Publishers Clearing House (PCH) does have a sweepstakes but does not call people in advance to tell them they’ve won. Report PCH imposters to their hotline at 800-392-4190.
- Check to see if you won a lottery. Call the North American Association of State and Provincial Lotteries at 440-361-7962 or your local state lottery agency.
- Do an internet search of the company, name, or phone number of the person who contacted you.
- Law enforcement does not call and award prizes.
- Talk to a trusted family member or your bank. They may be able to help you stay in control of your money in the face of fraudster pressure.
BBB is a nonprofit, business-supported organization that sets and upholds high standards for fair and honest business behavior. Most BBB services to consumers are free of charge. BBB provides objective advice, free BBB Business Profiles on more than 5.3 million companies, 11,000 charity reviews, dispute resolution services, alerts and educational information on topics affecting marketplace trust. Visit bbb.org for more information.