An old saying holds that if something sounds too good to be true, it probably is. A person who receives a notice that he or she has won a contest and is entitled to cash or other prizes should keep this saying in mind when considering what to do. For at least the last 10 years, fake contests and sweepstakes have defrauded consumers out of millions of dollars. Many victims are elderly and may be particularly susceptible to such schemes. Federal and state laws offer some remedies for people who fall prey to this type of scam, but consumers should educate themselves about the various types of contest scams and the ways to identify them.
Types of Contest Scams
The classic example of a contest or sweepstakes scam involves a letter notifying recipients that they have won a prize, which may be a sum of cash or something else of value. In order to claim this prize, however, they must fill out a form and return it with a fee, which is usually between $10 and $50. The notice may also tell them that they are entered into a contest, and that the form and fee will improve their chances of winning. Once they send in the money, however, they never receive anything of value. The person or business keeps the money and may even sell the personal information they provided to telemarketers or others. In extreme cases, victims’ information could be used in identity theft or other criminal schemes.
Mail and telephone calls have been the standard method for years. Scammers began using email nearly 20 years ago, and now they are also using social media sites like Facebook and Twitter to contact potential victims. Scams that use email and social media are similar to “phishing” scams, in which a scammer sends an email disguised to look like an official communication from a bank in order to get the recipient to respond with personal identifying information.
How to Spot a Contest Scam
The Federal Trade Commission (FTC) offers some indicators that a contest or sweepstakes is fraudulent, including:
You did not enter a contest or sweepstakes of your own accord;
You have to pay to enter, improve your chances of winning, or claim your prize;
You have to provide personal financial information;
The notice purports to be from a government agency like the FTC, which does not manage sweepstakes;
You must attend a sales meeting or similar event in order to win; or
The notice you receive was sent by bulk mail.
Legal Remedies for Contest Scam Victims
Numerous consumer protection statutes offer remedies for consumers who have fallen prey to contest scammers, or who want to make contest scammers stop contacting them. The Do-Not-Call Implementation Act of 2003 provided for the creation of the National Do-Not-Call Registry, the list of telephone numbers that telemarketers are not allowed to call. The Telephone Consumer Protection Act of 1991 protects consumers against many types of predatory uses of automatic dialing systems, faxes, and text messages. The CAN-SPAM Act of 2003 gives consumers the ability to stop unsolicited text messages and emails.
The Federal Trade Commission Act (FTCA) gives the FTC authority to pursue contest scammers for deceptive or misleading practices. In one recent case, the FTC sued a California resident who sent mass mailings to thousands of consumers falsely stating that they had won large cash prizes, and asking them to send a fee of $20 to $30 to claim the prize. He allegedly received more than $11 million from consumers in the U.S., Canada, the United Kingdom, and other countries. Under a settlement agreement, the individual accepted a judgment for the amount received from his victims and a ban from the prize promotion industry.