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.
A new report by Better Business Bureau says sweepstakes, lottery and prize schemes are devastating victims financially and emotionally with ever-evolving methods.
These frauds concentrate on seniors, targeting them by direct mail, cold calling, social media, even text messages and smartphone pop-ups.
BBB warns consumers to be on guard against these serious and pervasive frauds and their perpetrators.
The report – “Sweepstakes, Lottery and Prize Scams: A Better Business Bureau Study of How ‘Winners’ Lose Millions Through an Evolving Fraud” – notes these scams bilked $117 million out of half a million Americans and Canadians in 2017 alone, with actual victims and losses likely numbering much higher.
BBB received 2,820 sweepstakes and lottery scam reports in Scam Tracker in 2017, with a median loss of $500. Seniors are the most frequent target and suffer the largest losses by far in these scams, which the report found commonly originate in Jamaica, Costa Rica and Nigeria.
The report recommends stronger law enforcement efforts on three fronts — in Jamaica, which has seen an upswing in violence related to lottery fraud profits; in the U.S., where law enforcement is urged to step up extraditions and prosecutions of overseas fraudsters operating in the U.S.; and globally, as law enforcement agencies worldwide are encouraged to take steps toward holding deceptive mailing organizations accountable and stopping fraudulent mail. It also urges Facebook and other social media platforms to take steps to weed out fake, fraudulent profiles and make fraud reporting easier.
“The law requires you to purchase a ticket to play the lottery, but a legitimate lottery or sweepstakes will never ask its winners to wire money to claim the prize,” says Evan Kelly, senior communications advisor for BBB serving Mainland BC. “It’s heartbreaking that these fraudsters are continually finding new ways to prey on older people who are dreaming of a big win or a financial windfall in their final years.”
Among the report’s key findings:
* 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 the following tips for consumers to avoid being caught in lottery or sweepstakes fraud:
* 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.
* Ask yourself – did you enter the lottery in the first place? Call the lottery or sweepstakes company directly to see if you actually won.
* 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.