ContestFraud.com

CBS had a great story on sweepstakes fraud just the other day:

And then there are the so-called “Leads” brokers, a shadowy network of guys who come to life on wiretap – sounding like something out of The Sopranos – making their living selling lists of names and personal information pulled from bogus sweepstakes entries or lottery forms or bought from crooked employees inside, for example, credit reporting services. I showed up at the door of one such supplier down in Rock Hill, South Carolina, a real piece of work by the last name of Panas, only to have it slammed in my face. Panas hung up the phone when I told him I heard he was the man to see for lead lists built on phony sweepstakes. Maybe he’ll answer if the feds come calling.

For seniors or family and friends of seniors there’s really a pretty simple list of do’s and don’ts. Don’t fill out any sweepstakes or lottery forms, especially those asking for home phone numbers or if you have a credit card or not. Don’t stay on the line when someone says all you need to do to collect some GRAND PRIZE is pay a tax or fee. If you’re the least bit suspicious Do send the attorney general in your state those forms or entries noting your suspicions.

Well ain't that just great! If you thought you were safe from fraudulent sweepstakes pitches because you never sign up for any giveaways, it looks like you're still vulnerable, simply by having a credit history! So please do take their advice, even if you think you are immune. Remember, you never need to pay anything up front to collect a sweepstakes prize, regardless of what you're told it's for -- taxes, insurance, lawyer fees, whatever.

The USPS web site has a very catchy and very true slogan for their web page warning people about sweepstakes fraud:

Collecting your sweepstakes prize should cost you nothing... or could cost you plenty!

Here's an example of our tax dollars at work in a good way. They hired writers far better than myself to give you free advice that everyone should know. If you don't have an opportunity to check out this section of their web site, here's a good summary for you:

Postal Inspectors suggest you ask yourself these questions to prevent being scammed:

• Does the promoter ask for your credit card number, checking account number, bank account information, or other personal account information? A legitimate prize company won't ask for this to declare you a winner.

• Do they ask you to wire money or make a payment in an urgent manner? Do you feel pressure to make a payment within a given time deadline to collect your prize? Take a step back and evaluate the offer. Contact a Postal Inspector to verify that you're dealing with a legitimate sweepstakes offer.

• Does the advertising copy clearly state that no purchase is necessary to win and a purchase will not increase your chances of winning? You never have to pay to play or to collect your prize when the sweepstakes is legitimate.

I brought up the Do Not Call database the other day, and I suppose I ought to now tell you how to sign up.

If you have a cell phone or land line that you don't want telemarketers to call, go to this web site:

DoNotCall.gov

It may take up to a month for your registration to take effect. Once it does, telemarketers should not be calling your phone number for five years.

If you have any problems signing up online, you can also call the Do Not Call switchboard and register over the phone by calling 1-888-382-1222. You need to call from the phone number you want to register.

This is not sweepstakes fraud, to be precise, but is something you should be aware of. From the Triangle Business Journal:

Craftmatic of Maryland, a direct-to-consumer bed seller, will change tactics after the state attorney general's office accused it of tricking people into signing themselves off the federal Do Not Call registry.

The attorney general's office said Craftmatic sent contest entry forms through the mail to seniors. When seniors signed up for the contests, they also signed up to get telemarketing calls from the company.

When the Do Not Call registry started several years back, I remember reading an article analyzing the legislation, which hopefully I will find someday and will be able to include on this blog. It showed that the way it was worded, once you estabished a business relationship with a company, that overrided your preference on the Do Not Call list, and allowed that company to phone you. It sounds reasonable, because once I purchase an item from someone, I would want them to call me to set up a delivery time, if it's large, or to call me if it's out of stock. However, one of the things that was considered "establishing a business relationship" was entering a sweepstakes sponsored by that company.

So please be aware that when you enter a sweepstakes, you are giving that sponsor the right to call you, even if you've registered with the Do Not Call database. And I'm sure if you did win that sweepstakes, you wouldn't mind them calling you to tell you "You're going to Hawaii!". However, I did wonder if companies would begin holding sweepstakes simply to gather phone numbers and be able to legitimately call them, as a loophole around the legislation. It appears they are.

The lesson here: If you really don't want surprise phone calls on a particular phone number, never use it on a sweepstakes entry form.

For those of you without teenagers in your life, TMI = Too Much Information!

Deborah Mosher, out in South Georgia, had her own scam story to relay to her local TV station, WALB.com:

When Deborah Mosher received a letter saying she won 250 thousand dollars, only one thought ran through her mind. "I said this isn't real. There's no way this is real. It's to good to be true."

With it came a check for a little over three thousand dollars to pay necessary insurance fees. "I really though it was a real check," she says.

So she called the sweepstakes but grew suspicious when they began asking her for her personal bank information. "I said no, I'm not giving you my checking account number. Then he says, I want to know the savings account."

And I hope a desire to obtain your banking information would raise a red flag with you as well. There is absolutely no reason for a legitimate sweepstakes to know your banking details. It's amazing, all the tiny little variations there are on this latest sweepstakes-check-in-the-mail scam, isn't there?

An article from last weekend's Kansas City Star makes an observation that I have been noticing myself in the last few days, that an increasing number of scams are coming from our neighbors to the north:

But investigators say Blevins [whose story is recounted in the article] is no more a fool than the thousands of other senior citizens targeted by brazen telemarketing scams originating outside the United States, increasingly from Canada.

The many lottery, sweepstakes, shop-at-home, counterfeit-check and advance-fee scams have grown so pervasive that authorities now categorize them under the umbrella of “cross-border fraud.”

They blame the sharp rise on jurisdictional differences, lenient foreign laws and savvier scammers.

It's a 4-page article so I doubt many people will make it to the end. That's why I want to point out a resource mentioned near the end of the story, as it may be missed by people who could benefit by it. Apparently there is a Canadian organization called PhoneBusters which handles complaints about telemarketing lottery and sweepstakes fraud, and they will accept reports from Americans as well. If someone in Canada has called claiming you've won a sweepstakes or lottery prize, and you're being asked for money, be sure to contact them. Here's their web site and phone number:

PhoneBusters -- http://www.phonebusters.com/english/index.html -- 888-495-8501

The following warning comes from the state of Maine's web site:

Having received additional questions from consumers, the Bureau of Insurance is once again advising to beware of illegal sweepstakes scams targeting people in this State and across the country. “We have reports from individuals who have recently received bogus sweepstakes letters and checks using the logo and name of insurance companies without the company’s knowledge or authorization. We want to make sure individuals are aware that these sweepstakes and checks are not authentic.”

If you live in Maine and have received a letter like this, click here for the Maine Bureau of Insurance's phone number, as they'd like to hear from you.

From the Herald Tribune in Southwest Florida, we learn that this check-in-the-mail scam has a name:

The sweepstakes letter Richards received is a variation of what is often called the Australian scam. It has been around for many years, and seems quaint in the age of Internet scams, since it often still uses snail mail. But the Federal Trade Commission says it is going strong.

Some people who would be wary of an e-mail scam are less so when word comes via the Postal Service, it seems. And the FTC says this con works in part because of the check the scammers enclose.

Richards got one for $1,980, a typical amount. It looked good.

...He only stopped trying after he looked again and noticed the letter's grammar, punctuation and syntax. A sample:

"To elaborate more, this draw was held in Atlantic City, New Jersey, Moreover if we do not hear from you in 3weeks from the date this letter was sent, your file will be closed and you will no longer be able to claims your winnings."

A real notification letter would probably be written by someone who could pass a high school English test, Richards decided.

This article points out another red flag that ought to send out alarms to you as well, if you ever find yourself on the receiving end of this scam. Professional sweepstakes judging agencies usually employ spell-checkers. This doesn't mean that all scammers use bad English or can't spell, or that a legitimate win notice you may receive someday won't contain any typos. Let's just say that the chances that the sweepstakes win notice you receive in the mail has a higher chance of being a scam with each spelling and grammar error you spot.

WATE 6, a TV station in Tennessee, reports on Justin, a junior-high school student who recently received an unexpected check for over $2,000 in the mail:

Justin Myers doesn't enter many contests. But a letter arrived for him the other day saying he'd won a sweepstakes.

"You are among the 200 winners in this year's sweepstakes. You have therefore been approved for a lump sum of $63,000," Justin reads.

The letter also included a check for $2,194 in Justin's name.

However, "I was pretty upset when I seen it came to a minor," [his father John] said. He called American Claims, the company that sent the letter. It says it's based in Canada. He wanted to know what he was supposed to do with the $2,194 check that looked real.

"She told me to take the check and cash it, take it to a Money Gram and send them the cash," John says.

"I got to looking. I was like, there is no way this can be right," Lisa says.

You can read the rest of the story here. It sounds like the main red flag for his parents was the fact that a minor supposedly won this sweepstakes. Legitimate sweepstakes are not permitted to award prizes to minors. You will often see written in the official rules of legimate sweepstakes that "You must be 18 or older to enter", or other such wording, indicating that minors cannot participate in their giveaway.

Another red flag was the instructions received from "American Claims". Cash the check and MoneyGram the cash back to them? It sounds ridiculous on the face of it, but I'm sure the parents were told this was necessary to pay taxes on the prize. It's a lie of course, on so many levels:

• The company was supposedly located in Canada. Who would they be paying taxes to, Canada or the United States?
• How does this company know what the winner's tax rate is?
• What exactly is the point of playing this "hot potato" game with the check -- cash it, send it back?
• Why use MoneyGram? If taxes really need do need to be paid, couldn't they use any payment method convenient to them?

Who knows which of these thoughts ran through their mind. In any case, they were smart enough not to cash the check. If they had, they would have eventually got a letter from their bank that the check had bounced. If in the meantime they had MoneyGram'd the cash back to American Claims, they would have been out $2,194 of their own money. If they were leery enough to wait for the check to clear to wire back the money, they would have been charged a bounced check fee.

It's not mentioned in the story, but I'm also positive that they were instructed to use MoneyGram because the scammer had successfully hacked another innocent person's MoneyGram account. This allows them to get their hands on the cash, but not leave a trail leading back to their real identity.

And please don't think this is a scam aimed solely at kids. Adults have also been receiving similar letters with real-looking counterfeit checks in the mail of late. If you receive one, please don't cash it. Take it to your local bank and ask them to investigate it.

What follows is an excerpt from The New Age Examiner:

So when Charlene Wilson of Lake Walter learned that her husband Art had won $500,000 in the Publishing Clearing House Sweepstakes, she got a little excited.

Especially when they were told that on Wednesday a company known as Global Security Express would be delivering a cashier's check for a half-million big ones.

But then the Wilsons got very suspicious.

A female attorney with the last name Bloomberg said she could help the couple reduce the tax bite from an expected $247,000 due the government down to $65,500.

But this would only be possible if they took action before the check arrived and provide a down payment of 10 percent.

When the Wilson's said they didn't have $6,550, the caller then said they could make alternate arrangements and accept $1,500.

The red flag for Charlene was the request for money up front, before the couple actually had their prize winning check in their possession. You can read the whole story here. No legitimate sweepstakes, or an attorney representing one, will ask you to pay money up front for taxes, before you've received your prize money. If the Wilsons had won $500K from a legitimate sweepstakes, they would have received a check shortly after filling out an affadavit with a judging agency. A 1099 form would be sent to both them and the IRS in January 2008, and the Wilsons would have had until April 15, 2008 to pay taxes on their win.

Another clue that could have tipped her off was the name of the sweepstakes -- Publishing Clearing House. It sounds like the name of a sweepstakes you've probably entered yourself, doesn't it? But take a closer look -- those mailers you get adorned with Ed McMahon's face actually come from the Publisher's Clearing House. I also know of no delivery company named Global Security Express. I suppose this could be a small, regional delivery service in the area she lives, but most likely, the scammer was trying to play off of the American Express name. If you ever browse the American Express web site, you may notice they have a section entitled "Global Security Solutions". Something tells me the "attorney" that called them may have been inspired to name her fictional delivery service after reading some AmEx promotional literature.

There's two things to take away from this:

1. Never pay taxes for any sweepstakes win up front.
2. Go to Google and verify the names and other details relayed to you about your prize win.

Hello all! My name is Denise and I operate two websites for sweepstakes fans like myself:

ContestGuide.com -- A directory to online sweepstakes
SnailSweeps.com -- A daily blog of snail-mail-entry sweeps (true sweepstakes fans call them sweeps!)

One thing that really ticks me off are the scammers who try to defraud people out of their money, under the guise that they've won a sweepstakes. My plan initially was to inform people about how these scammers work so as not to be caught in their snare. Then it occurred to me that the site I was thinking of creating could actually be used as a tutorial by would-be scammers to learn how to pull these scams off properly! So instead, I will be teaching you what red flags to look for, to determine what's legit and what's not. I plan to cover both online and real-world sweepstakes fraud.

I encourage questions. If you receive an email stating you've won a prize, and aren't sure if it's for real or not, leave a comment. If you are thinking of entering a sweepstakes, either online or elsewhere, and aren't positive if it's on the up-and-up, just ask.