Volume 1 Number 49
December 6, 2004




Inspection Service Home Page

United States Postal Inspection Service

Sweepstakes and Lottery Fraud

Chain Letters
Free Prize Scheme
Hot Tip on Playing Foreign Lotteries By Mail: "Don't Do It!"
Government Look-Alike Mail The Free Vacation Scam



Last week, we spoke to a woman who lost more than $400,000 in a phony sweepstakes fraud. Although we have written about this scheme before, the problem never seems to go away.

Swindlers know that if they wave a carrot at the end of a stick, some unsuspecting, gullible victim will bite. Because this fraud is alive and well we thought we'd refresh your memory about the red flags of sweepstakes frauds.
Victims of sweepstake and lottery swindles tend to be trusting people who like to enter contests. Many victims are unmarried or widowed seniors with access to cash.
Victims are contacted over the phone by articulate swindlers claiming to be lawyers, customs officials, police officers or lottery officials. First they convince you to enter a lottery or sweepstakes after you answer a series of qualifying questions. A few days later, they call back and say you won a huge cash prize. The prize can be anywhere from thousands to millions of dollars.
After you are convinced that you won, the crooks ask for money. They say that before you can claim your prize you must pay sweepstake-related fees, including federal and provincial taxes, customs duties and insurance. You may also be told you must keep the fact that you won a secret. If you disclose the prize to anyone, you forfeit your prize.
The swindler asks you to send the money by courier or wire transfer such as Western Union. If you fall for the ploy, your money is stolen.
However, the fraud doesn't always stop there. In many cases, the crooks are just warming up. If you are gullible, they string you along and defraud you of even more. They furnish a variety of reasons why you must send in more money. You may fall for this because of the huge carrot dangling at the end of the stick -- the prize money.
To lend credibility to the scheme, swindlers have several different people telephone you over a period of days. Each time someone new calls, you become more convinced that the sweepstake is legit.
In some cases, the crooks swindle you even after you discover the ruse. For example, you may receive a call from someone claiming to be a police officer, lawyer, FBI agent or a customs official who solicits money from you under the guise that your lost funds have been recovered.
Investigations have revealed that crooks keep meticulous notes about victims, including amounts collected, fictitious prize amounts and mailing addresses where you sent money. Good notes are kept so they can maintain consistency while ripping you off.
Catching swindlers is difficult to impossible. They are often located outside of the country. You rarely meet personally with anyone and the people you speak with over the phone use fake names. The thieves use cellular phones, prepaid telephone calling cards, pagers and voice mail services for communications.
These prepaid services don't involve subsequent billings or mailings so the user can't be traced. The following is a real-life scenario involving a Florida resident who allegedly won an Australian sweepstakes:
The victim was contacted over the phone and told she won several million dollars. She was informed that her winnings were being transferred from Australia to California and then to Canada. After arriving in Canada, the prize money would be sent to her.
First, however, she had to mail a bank check for just under $5,000 to a Canadian address. The money was needed to cover costs associated with winning the sweepstakes.
The victim mailed the check and a few days later, she was telephoned by a different person who said there were legal snags encountered when transferring the money to Canada. Therefore, she had to send more money to redirect the winnings to Costa Rica. The victim mailed $4,000 more. This scheme continued for about two weeks, with the crooks requesting more money each time. By the time she realized it was a scam, the woman had lost $30,000.
Right now, many of these bogus sweepstakes are operating from Canada. Telemarketing swindles are so bad that the Canadian authorities have established a toll free number you can call to report a crime. The service is referred to as Phonebusters and the number is (888) 495-8501. There is a also a Web site: www.phonebusters.com.
If you believe you have been defrauded in a telemarketing scheme, there are federal and state government agencies that can help. You can file a complaint with the Florida Department of Agriculture and Consumer Services at (800) 435-7352. For investments and loan frauds, you can call the Florida Office of Financial Regulation at (239) 338-2445. If the business is outside of Florida, you can contact the U.S. Federal Trade Commission at (877) 382-4357.
Mark Mathosian is a financial administrator with the Florida Office of Financial Regulation in Fort Myers.

The skyline for December is downtown Gainesville, featuring the Hippodrome Theater, originally the post office.