« Return to Blog

Too Good to Be True? How to spot a lottery scam.

in Protecting Your Identity
How to spot a lottery scam - lottery scams

“Congratulations!” “You’ve just won $20,000!” “You’re the lucky winner!”

Music to your ears, right? After all, who wouldn’t want to win big with minimal effort?

Unfortunately, lottery/ sweepstake scams are one of the most common consumer scams in the United States. Each year, thousands of people nationwide fall prey to these type of scammers, who con their victims under the pretense of false cash or prize winnings.

Although the financial effects of being scammed can be detrimental, they too can affect you emotionally and psychologically. Equipping yourself with knowledge can help protect yourself and those you care about from emotional and financial distress.

In this article, we’ll discuss the signs of these types of scams, how to avoid being a victim, what a legitimate sweepstake win looks like, and what to do if you’ve been scammed.

How to Spot Lottery and Sweepstakes Scams

There are common red flags/signs when it comes to these types of scams. If anyone engages you in any of the following, be aware of the potential scam.

  • Pressuring you to act quickly. Any time you start to feel pressured or if someone is telling you to act quickly or you’ll lose out, it’s important to not act immediately. Scammers prey on emotions and intend to make people feel hurried so they don’t have adequate time to fully comprehend what is going on.
  • Telling you that you need to pay money. Scammers may tell you that you are required to pay a “fee or “taxes” in order to claim your prize. It’s important to note that legitimate lotteries will require you to pay a set amount to play, and will typically give you the option to take a lump sum or recurrent payouts on winnings, but will not ask for large, upfront payments.
  • Asking for financial information. Never give out any personal information, especially to an unknown party. If you are unsure if the party is legitimate, you should obtain the proper contact information for the organization and contact them directly.
  • Sending you a fraudulent (but legitimate-looking) check. You may be able to cash the check immediately, but once your financial institution realizes it’s fraudulent, they will deduct the funds from your account. Fake check scams are rampant and difficult to spot and rectify, but there are things to look for. Additionally, if you discover any suspicious funds that were deposited into your account, you should immediately report it.
  • Telling you that you won a lottery in a foreign country. This scam is surprisingly common. Scammers will tell you that you won a vacation, lottery, or other sweepstakes but then ask for money for taxes, service fees, handling charges, etc. before you can receive your prize. It’s illegal for a U.S. citizen to play in a foreign lottery, so this is almost always a scam.
  • A notification of winning sent via bulk mail. Scammers save money by using bulk mail, rather than first-class or delivery services.
  • Impersonating a well-known organization. Scammers often impersonate a law enforcement officer, IRS agent, or employee from a well-known organization, which can add to the difficulty of discerning this as a scam. Look for any signs or obvious errors, such as emails containing multiple typos or slight changes to the company’s name spelling. When in doubt, reach out directly via a legitimate means of contact.

Avoid Being the Victim of a Scam

With a little bit of foresight and awareness, you can help protect yourself from scams. Follow these tips to help you avoid being the victim of this type of scam.

  1. Never send gift cards, money orders, or wire money. Scammers often demand you use these means as a way to send money. Because these methods are nearly impossible to reverse, they are preferred payments by scammers. Never send any money for a prize. Regardless of how good the offer sounds, remember to never send money or give out personal information in exchange for a prize.
  2. Do some research. If you want to know if an organization is legitimate or if what you’re experiencing is a scam, do some online research! Chances are, you likely aren’t the first person to receive this offer or phone call. Search for a company’s credibility and if there are scam complaints against their business.
  3. Protect your identity. Identity theft can be time-consuming and extremely costly to straighten out. Obtaining affordable protection can help you and your family protect your identity from scammers. Lafayette Federal’s identity theft protection offers prevention, detection, and restoration services for you and your loved ones.

How to Tell if a Sweepstakes is Legitimate

Generally speaking, you can only win a lottery or sweepstakes that you actually entered yourself. Of course, you may have forgotten you entered a smaller drawing, so you must make informed, rational decisions before engaging.

Once you’ve received a prize winning notification and you think you legitimately may have won, contact the organization directly to verify your win. You can also call your local state lottery agency or the North American Association of State and Provincial Lotteries to check the status of a lottery win.

Note: If you receive lawful prize winnings over $600, the issuing organization will need to obtain your social security number for tax reporting purposes. Take the proper steps to ensure it’s a legitimate organization and that you’re sending this information in a secure manner. And remember, valid sweepstakes and lottery winners will not be asked for money to receive their prizes.

What to Do if You’ve Been Scammed

If you or a loved one has been the victim of a scam, it’s important to act quickly and report what happened immediately.

Scams that arrived in the mail can be reported to the U.S. Postal Inspection Service. You can also report scams to your state’s attorney general, the Better Business Bureau, and/or the Federal Trade Commission.

The National Elder Fraud Hotline is available to those aged 60 and older who think they may have been the victims of a scam. This resource will help seniors get in touch with the proper agency or authorities, depending on the scam.

If you paid a scammer, there are steps you can take in an attempt to mitigate loss. If you paid via direct deposit or credit/debit card, contact the issuing financial institution and ask them to reverse the payment or charge. Alternatively, you’ll need to reach out to the gift card or wire transfer organization directly (if you paid via these methods).

If you are a victim that gave out personal information, it’s important to start taking steps to protect yourself from identity theft. Finally, if you gave out any passwords or usernames, change them to new, secure ones as soon as possible.

Gain Protection with Lafayette Federal

At Lafayette Federal Credit Union, we know that the rise of scams puts more and more people at risk of financial fraud every day. We care about our members’ online and financial safety, and our team members are trained to help you spot potential scams or abuse that could harm your financial wellbeing.

If you have concerns about a potential scam or believe you may be a victim to one, don’t be afraid to ask questions. Come into a branch or learn more about protecting your identity online at Lafayette Federal.

Not a Lafayette Federal member yet? You can become a member by completing an online membership application.

Small Business Scams

Small Business Scams: Prevent your business from taking a hit.

Like their larger counterparts, small businesses are no strangers to fraud. In fact, smaller organizations may be even more susceptible to scams than large corporations. A 2018 study found that almost two-thirds of small businesses were aware of the potential of being scammed. Unfortunately, smaller businesses often suffer an impactful financial loss when they become victimized.

Read more