When it comes to sweepstakes and lottery scams, seniors are scammed the most frequently and pay out the most in losses, according to the BBB International Investigations Initiative’s most recent study.
To read the full study, which was released on June 5, 2018, click here.
Last year, consumers in the U.S. and Canada reported $117 million in losses to these scams, through which fraudsters approach victims with fake congratulations for winning lotteries and other giveaways. Once victims have been convinced to send money up-front for “taxes” or other fees necessary to collect their winnings, the scammers disappear without delivering the promised prizes.
Scammers often approach victims through social media platforms, email, text message, phone calls, and mail.
In May, a Denver-area man reported $4,000 in losses to one such scam after being contacted on Facebook and told that he had won a cash prize. A relative covered the majority of his $5,000 “delivery fee,” but according to the victim “once I couldn’t pay the rest, [the scammer] dropped the conversation and wouldn’t state a refund.”
Lottery and sweepstakes fraud is among the most commonly reported type of consumer fraud today. In 2017 it was the third-most complained about fraud category for both the Federal Trade Commission (FTC) and the Senate Aging Committee, and the fourth-most reported scam type for BBB’s Scam Tracker. Together, the FTC, Internet Crime Complaint Center, and the Anti-Fraud Centre (the Canadian central agency that collects information on consumer fraud) have received nearly half a million complaints relating to sweepstakes/lottery fraud over the past three years—a staggering amount, given that FTC studies have found that fraud reported to law enforcement and BBB represents less than a tenth of the consumer fraud that actually occurs.
The finding that older consumers are more likely to fall victim to sweepstakes/lottery scams adds a caveat to the results of BBB’s recent 2017 Scam Tracker Risk Index, which earlier this year revealed that in general as age increases, consumers’ susceptibility to fraud decreases (although older consumers, on average, lose more money when they do become victims). The fact that more than half of sweepstakes/lottery scam victims are over 60, and more than two thirds of the money lost comes from those over 70, is likely the result of the tactics scammers employ for these specific types of scams.
Because seniors are more likely to have been at the same address and used the same phone number for longer, and may have more money saved up, they are easier targets for lottery/sweepstakes fraud. In addition, it is speculated that with these types of scams, scammers seek out victims who may suffer from mild cognitive impairment, dementia, or Alzheimer’s disease.
Some of the study’s key findings include:
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.
BBB offers consumers the following sweepstakes/lottery-related tips:
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 sweepstakes 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 of 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.
BBB encourages consumers who believe they have been scammed, or approached by a scam, to submit a complaint to BBB’s Scam Tracker program.
The study was authored by BBB’s International Investigations Specialist C. Steven Baker. Previously, Baker was the director of the FTC’s Midwest Region.
