Cleveland BBB warns more money is lost to sweepstakes scams amid the pandemic

CLEVELAND, Ohio (WOIO) - Trying to come by sweepstakes win may be temping in hard financial times brought on by the pandemic, but you may want to stick to hoping for a win in the VAX-A-MILLON drawing.

Our partners at the Cuyahoga County Scam Squad have an important warning for consumers, as new numbers emerge.

According to the Better Business Bureau, 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 the 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) and the FBI’s Internet Crime Complaint Center (IC3). 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.

According to Sue McConnell, President of Better Business Bureau Serving Greater Cleveland, “BBB’s newest research emphasizes the importance of educating consumers of all ages. The research shows that scammers are good at what they do and anyone can become a victim.” However, 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.. Confinement during the pandemic, along with powerful social influence tactics, also helped lottery scammers sell the scam, according to Anthony Pratkansis, Professor Emeritus of the University of California. “Scammers often talk to victims every day, grooming them and building trusting relationships....(They) also employ different voices, sounding authoritative at one point, speaking as a partner at others, or even acting as a supplicant asking for help to make the prize finally appear.”

According to BBB Scam Tracker 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 but they also may be asked to pay via wire transfer or bank deposit into a specified account, or even cash sent by mail.

In reality, the prize money 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.

Lottery scammers also often use victims as “money mules” to receive money paid by other victims and then transfer the money to the scammers. This makes it harder to trace victim funds and find the actual scammer. Some victims do this without realizing that the money is coming from other fraud victims; others may believe that this is a way to recover some of the funds they have lost. Still others may become mules because of threats from the scammers.

A Pennsylvania woman reported losing at least $35,000 over the course of three years after receiving a letter from “Mega Millions” in April 2017 that told her she had won $5.5 million and a 2019 Mercedes Benz. The woman said the scammer, with whom she spoke on the phone daily for several years, initially requested $9,500 in fees, but more requests for money followed. The woman paid the “fees” by wire transfer and gift cards. She also cashed a counterfeit cashier’s check sent by the scammers. Later, the woman acted as a money mule on several occasions and fraud victims subsequently began contacting her directly. She believed all of these tasks were necessary for her to receive her winnings. When the woman complained to the scammer with whom she had been speaking, he threatened her and her son.

BBB offers the following advice on how to tell fake sweepstakes and lottery offers from real ones:

• Real Lotteries Or Sweepstakes Don’t Ask For Money. If someone wants money for taxes, themselves, or a third party, they are most likely scammers.
• Call The Sweepstakes Company Directly To See If You Won. Publishers Clearing House (PCH) does not call people in advance to tell them they’ve won. Report PCH imposters on their website. Check to see if you have actually won at 800-392-4190.
• Do An Internet Search Of The Company, Name, or Phone Number Of The Person Who Contacted You. Check BBB Scam Tracker to see if other consumers have had similar experiences.

If you think you have been a target of lottery/sweepstakes fraud, file a report with:

• BBB Scam Tracker, or contact Better Business Bureau Serving Greater Cleveland
• Federal Trade Commission (FTC), or call 877-FTC-Help
• The Cuyahoga County Scam Squad

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