Sweepstakes, lottery and prize promotions are extremely popular methods used by companies to attract new customers. The chance to win big prizes like cars, vacations and large sums of money is enticing to many people. However, these types of promotions have also become prime targets for scammers looking to prey on unsuspecting consumers. So how can you tell if a sweepstakes, lottery or prize is legitimate or a scam designed to steal your money and information?
What are sweepstakes, lotteries and prize promotions?
Sweepstakes and contests involve a game of chance where winners are drawn at random. No purchase or payment is necessary to enter. Lotteries also involve random drawings but do require some form of payment or purchase to enter. Prize promotions are like sweepstakes but involve some kind of skill component to participate beyond just submitting an entry form.
All three types of promotions are used to attract attention, generate leads and increase sales. Legitimate companies leverage peoples’ desire to get something for nothing by offering the chance to win prizes. However, scammers exploit this same human tendency through fake promotions designed to steal money and identities.
How do scam sweepstakes and lotteries work?
There are a few common tactics scammers use to perpetrate fraudulent sweepstakes and lottery scams:
- Asking for money upfront: Real sweepstakes never require you to pay or purchase something to enter. Scammers will often ask for “fees” to claim prizes.
- Guaranteed winnings: It’s impossible to guarantee someone will win a random drawing. Scammers will promise winnings to convince people to enter and pay fees.
- Notification via phone or email: Legitimate contests always notify winners via mail. Scammers use phones and email so they can collect personal info.
- Requests for personal information: Scammers will ask for sensitive info like bank account and Social Security numbers to steal identities.
- Unused prizes: Scammers will claim there are unclaimed prizes that need winners. Real sweepstakes always award what they promise.
If a promotion asks for money, guarantees you’ll win, contacts you directly, or claims there are unclaimed prizes, it’s likely a scam designed to defraud.
How to identify and avoid sweepstakes scams
When presented with a sweepstakes or prize offer, there are a few key steps you can take to determine if it is legitimate or a scam:
Research the company
Do some digging to find out as much as possible about the business or organization sponsoring the promotion. Search online for the company name along with words like “scam”, “complaint” or “review”. Check sites like Better Business Bureau and RipOff Report for information. Legitimate brands will have an address, customer service line and terms/conditions on their website. Be wary if the company seems fake or doesn’t have much of an online footprint.
Read the fine print
Official rules and terms/conditions for any real sweepstakes or lottery are essential. Read the fine print closely for specifics on how to enter, how winners are chosen, odds of winning, how prizes are awarded and expiration dates. Vague details or contradictory information are red flags.
Look for a “No Purchase Necessary” statement
Federal law requires sweepstakes sponsors to provide a free method of entry. Be suspicious if you can’t find official rules or a “No Purchase Necessary” statement. Many scams will claim you have to pay to enter or claim prizes.
Be wary of required fees
It’s illegal to require payment or purchases to win sweepstakes prizes. Scammers will ask for “processing fees”, “delivery charges”, “taxes” or other costs. Phone scams often start with a call saying you won a prize but must pay fees first. Never send money before verifying a promotion is real.
Avoid disclosing personal information
Never provide sensitive personal, financial or banking data to enter a prize draw. Scammers leverage sweeps to steal identities and emptied bank accounts. Don’t give out info unless dealing with a known, legitimate brand and website.
Use secure payment methods
If a promotion does require an entry fee, only pay through secure methods like credit cards. Never use wire transfers, cash apps, gift cards or other high-risk forms of payment that offer little fraud protection or recourse.
Warning signs of a sweepstakes or lottery scam
Here are some clear warning signs that a sweepstakes, prize draw or lottery is likely a fraudulent scam:
- Winners are required to pay fees before receiving prizes
- Taxes or other charges must be prepaid
- You are asked for personal financial information
- Contacted by phone or email to claim prize
- Money is requested through wire transfer or gift cards
- Guaranteed you will win a prize
- Need to purchase something to enter or improve odds
- Company has no address and little online information
- Claim you already won but now have to enter again
- Vague or contradictory rules and conditions
- Prizes have short timeframes to be claimed
- Winners must recruit others to enter
If a sweepstakes exhibits any of these warning signs, it is likely fraudulent. Remember, real lotteries and contests never require you to pay money or buy something to enter. Prizes are always completely free for winners.
What to do if you are the victim of a scam
If you provided personal information or lost money in a sweepstakes or lottery scam, take the following steps immediately:
- Contact your bank if account information was compromised. Cancel any recurring payments.
- Call credit card companies if card data was stolen. Request replacement cards.
- Change online account passwords that may be compromised.
- Report identity theft to the FTC if your SSN or other info was taken.
- File a complaint with the FTC regarding the scam.
- Warn friends and family about the scam if applicable.
- Consult a lawyer if you lost a substantial amount of money.
The quicker you act, the faster you can limit the damage caused by scammers. Be vigilant about checking for new fraudulent charges and accounts opened in your name moving forward.
How to report a sweepstakes or lottery scam
If you encounter a fraudulent sweepstakes or prize offer, be sure to report it so the scammers can be held accountable and prevented from harming others. Here are the best ways to report sweepstakes scams:
- Better Business Bureau (BBB) Scam Tracker: File a scam report with the BBB to warn others.
- Federal Trade Commission (FTC): Report fraud to the FTC online or by phone.
- Internet Crime Complaint Center (IC3): Submit an online complaint about internet-facilitated scams.
- State Attorney General: Look up the AG office in your state to file a consumer complaint.
- FBI: Submit lottery or sweepstakes scams to the FBI’s Internet Crime Complaint Center.
- US Postal Inspection Service: Report scam mailings and postal fraud.
The more scam victims speak up, the quicker authorities can work to stop these fraudulent operations from exploiting others.
Are all sweepstakes and prize draws illegal?
No, sweepstakes and prize contests can be completely legitimate ways for companies to promote their brand when operated ethically and legally. Here are some tips for spotting legal and real sweepstakes versus scams:
- Official rules are clear and explain processes fully
- No purchase or payment necessary to enter
- Winners are never required to pay any fees
- Sponsor is a known, reputable brand
- Does not ask for sensitive personal information
- Free method of entry is clearly provided
- Odds of winning are stated in rules
- Winners are notified via U.S. mail
As long as best practices are followed, many marketers use sweepstakes successfully and legally to engage customers. Researching sponsors, reading rules carefully and avoiding scams are keys to safely participating.
Examples of legal sweepstakes and contests
Here are some examples of well-known, legitimate sweepstakes and contests:
- Publishers Clearing House – Free to enter with mail-in forms. Well-known legitimate sponsor.
- McDonald’s Monopoly Game – Free pieces on food packages. $1 mail-in entry. Official rules posted.
- Pepsi Million Dollar Sweepstakes – No purchase required. Winners chosen randomly under official terms.
- PCH Lotto – Free entries by mail. $50 million prize insured by Gehrisch Group.
- Lays “Do Us A Flavor” – Submit new flavor ideas online to win $1 million. All terms disclosed.
The key characteristics of legal sweepstakes are transparency, not requiring purchases to enter, and following all truth-in-advertising laws. Taking the time to read official rules helps avoid falling victim to look-alike scams.
Tips for safely participating in sweepstakes
Here are some tips to keep in mind to make sure any sweepstakes or prize promotion you enter is legitimate and safe:
- Verify legitimacy before participating using research and official rules
- Never pay any fee or purchase anything required to enter
- Use secure methods like credit cards versus cash apps or wire transfers
- Don’t disclose personal financial information or account details
- Read all fine print and rules thoroughly before opting in
- Be wary of short entry periods or pressure to act fast
- Always look for free mail-in entry opportunities
- Confirm sponsors are real companies with a solid reputation
- Report any suspicious behavior or communications
- Save all promotion documents and correspondence
With sound judgment and safe practices, many sweepstakes and contests can offer harmless entertainment and the chance at great prizes. Stay vigilant and avoid opportunities that look questionable or ask for sensitive personal data.
Are sweepstakes scams common?
Unfortunately yes, fraudulent lottery, sweepstakes and prize scams are very common. According to the FBI, Americans lose $40 million annually to sweepstakes scams. Approximate annual losses include:
- Publishers Clearing House scams – $18 million
- Lottery scams – $12.8 million
- Jamaican lottery scams – $300 million
Top reasons scams remain widespread:
- Use of trustworthy company names like PCH to sound legitimate
- Prey on human greed with promises of huge winnings
- Leverage urgency and excitement to cloud better judgement
- Exploit the elderly who may be less skeptical
- Steal identities along with money due to disclosure of personal info
Staying aware of common techniques these scammers use and identifying warning signs are the best ways to avoid becoming a victim. Healthy skepticism of any promotion requiring upfront fees is essential.
Sweepstakes scam statistics
These statistics help provide a sense of the large number of lottery and sweepstakes scams attempted each year:
- Approximately 5.7 million Americans fall victim annually
- $40 million lost to sweepstakes scams each year
- 61% of elderly fraud victims were targeted via sweepstakes scams
- Up to $300 million lost annually to Jamaican lottery scams in the U.S.
- 30,000 people per year falsely told they won Publishers Clearing House prize
- 166,000 fake lottery and sweepstakes prize notices sent annually worldwide
| Year | # Sweepstakes Scams Reported | Losses Reported |
|---|---|---|
| 2018 | 11,569 | $7.6 million |
| 2019 | 14,048 | $15.3 million |
| 2020 | 6,227 | $4.1 million |
Being vigilant about identifying scams and reporting them is critical to reducing consumer losses. Never sending money or information to questionable sweepstakes sponsors greatly reduces your risk of becoming a victim.
Government agency and resources
Here are some good government resources with additional tips and guidance related to avoiding sweepstakes and lottery scams:
- Federal Trade Commission – http://www.consumer.ftc.gov
- FBI Common Fraud Schemes – http://www.fbi.gov/scams-safety
- Consumer Financial Protection Bureau – http://www.consumerfinance.gov
- US Postal Inspection Service – https://postalinspectors.uspis.gov
- FCC Contest Rule Summary – https://www.fcc.gov/consumers/guides/rules-and-regulations-contests-lotteries
State attorney general offices also have dedicated departments handling consumer complaints regarding sweepstakes and lottery scams. Reporting frauds to officials can help bring criminal prosecutions against scammers.
Beware Grandparent Scam Variations
A common sweepstakes scam variation targets grandparents and senior citizens using the “Grandparent Scam”. In this ploy, a scammer calls pretending to be a grandson or other relative claiming they desperately need money to pay fees on a prize or sweepstakes they won. Wanting to help their grandchild, victims end up wiring funds or sending gift cards before realizing it was a scam.
The Grandparent Scam accounts for over $41 million in losses annually in the U.S. Variations leverage the Publishers Clearing House name or fake winning tickets from lotteries. Being aware these vulnerabilities exist helps guard against being fooled by such despicable ploys.
Don’t Pay Fees to Claim Winnings
Fake notifications that you won an online or foreign lottery and just need to pay taxes and fees to claim the prize are very common. This type of advance fee scam hooks victims into thinking they are about to receive millions of dollars. In reality, any promotion that requires upfront payment related to winnings is always fraudulent.
Legitimate contests and drawings never require you to pay for anything upfront to receive a prize. Taxes or fees are also never collected in advance. Be very wary of anyone contacting you to claim lottery prizes or sweepstakes jackpots via phone, email or mail.
Stay Vigilant for Reward & Recovery Scams
After being victimized by an initial sweepstakes scam, a follow-up tactic fraudsters frequently use is contacting you posing as investigators or attorneys offering to recover lost money – for an upfront fee of course. The scam artists claim they can track the criminals and recover stolen funds, but need payment for services first.
In reality, they are just trying to siphon even more money from victims. Never send money or sensitive documents to someone claiming they can recover lost money or prizes. Contact real law enforcement like your state attorney general or the FBI if you already lost money in a scam.
Conclusion
Sweepstakes and prize promotions can be fun ways to try your luck, but also expose consumers to increased risk of fraud. Learning to identify warning signs of scams and using safe practices greatly reduces your chances of becoming a victim. Sponsors should always be researched, rules read fully, and no fees or purchase ever required to enter or claim. Being skeptical and guarding personal information are keys to avoiding sweepstakes scams successfully targeting so many vulnerable consumers.
