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BBB Study: Sweepstakes, Lottery, Prize Schemes Devastate Older Victims With Evolving Tactics

 

 

 

 

A new report by 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. 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.

“The law requires you to purchase a ticket to play the lottery, but a legitimate lottery or sweepstakes will never ask its winners to wire money to claim the prize,” said Mechele Mills, President, and CEO of BBB serving Central East Texas. “It’s heartbreaking that these fraudsters 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 in his 80s who 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.

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 BBB’s, including the St. Louis office, 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 sweepstake 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 for 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.

About BBB

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.