You may not be a winner, BBB warns

By Better Business Bureau staff

Sweepstakes and lottery scams resulted in higher financial losses during the COVID-19 pandemic compared to the previous three years, particularly for older people, according to new research from Better Business Bureau® (BBB).

BBB warns consumers never to pay money to claim a prize. If anyone asks for money before delivering a prize, it is likely a scam.

The research is an update of BBB’s 2018 in-depth investigative study, Sweepstakes, Lottery and Prize Scams: A Better Business Bureau Study of How “Winners” Lose Millions Through an Evolving Fraud.

Since the study’s publication, there has been a 16% decrease in complaints to the Federal Trade Commission (FTC), the FBI’s Internet Crime Complaint Center (IC3) and the Canadian Anti-Fraud Centre (CAFC). However, financial losses reported to all three agencies rose dramatically in 2020 with the COVID-19 pandemic, with FTC logging an increase of more than 35% in reported dollar losses.

The updated research highlights how these scams work and the importance of educating consumers, particularly those who may be susceptible to a specific scam.

Older adults are the primary target for sweepstakes scams

People over the age of 55 continue to be the primary target of sweepstakes, lottery, and prize scams, representing 72% of fraud reports for this type of scam received by BBB Scam Tracker during the last three years. Of the older consumers who were targeted, 91% reported that they lost money. Adults over 55 lost an average of $978 while those 18-54 lost an average of $279, according to Scam Tracker reports.

The confinement and isolation many older people experienced during COVID-19 may have helped fuel the increase in losses. Other factors that may contribute to some older people’s particular vulnerability include mental decline and relative financial stability, as reported in BBB’s 2018 study.

According to BBB data, sweepstakes scammers reach out through a variety of channels: phone calls, email, social media, notices in the mail, and text messages. They may impersonate well-known sweepstakes such as Publishers Clearing House or a state or provincial lottery. The “winner” is told to pay taxes or fees before the prize can be awarded. The FTC notes that people increasingly are asked to buy gift cards to pay these fees — its use is documented further in BBB’s 2021 in-depth investigative study on gift card fraud — but they also may be asked to pay via wire transfer or bank deposit into a specified account, or even cash sent by mail.

The prize does not exist, something the people may not realize before paying thousands of dollars that cannot be recouped. However, the harm suffered by lottery fraud victims can far exceed the loss of that money. The losses can put severe strains on family trust, and victims have even committed suicide. In addition, repeat victims may have difficulty ending their involvement in a lottery scam, and they may become money mules who receive and forward money from other lottery fraud victims.

Next week in the Greater Southwest News-Herald: learn how to avoid this dangerous scam.