Common Fraud: Lottery Scams

Learn how to recognize and protect yourself from common lottery scams.

Lottery scams have unfortunately become quite common. Scammers will contact their victims by phone, mail, or email, and tell their victims they've won large prizes in lotteries or contests. Sometimes the scammers ask for money -- processing fees or prepayment of taxes. Then they take the money and run. Other times they ask for bank account numbers so they can transfer the supposed winnings. They use the bank information to take money out of their victims' accounts.

Lottery scammers often, but not always, target the elderly. They take advantage of people's trusting natures. Scammers who work on the telephone are often described as charming and convincing.

Watch out for the following warning signs:

-- Someone who tells you that as a security measure, you should not tell anyone about your winning the lottery or contest until all the paperwork is finalized and the winnings have been deposited in your account. Legitimate lotteries and contests will never ask you to do that. The scammers are hoping you will keep quiet and not tell anyone who might realize this is a scam and warn you about it.

-- Someone who asks for any kind of payment up front. This includes so-called processing or administrative fees, as well as taxes that someone says should be paid to him or his company rather than directly to the government.

-- Someone who says that you've won a lottery or contest that you didn't even enter.

-- Someone who offers to buy tickets for you in a foreign lottery. It is illegal for Americans to buy tickets in foreign lotteries by mail or by phone. Scammers who claim they will buy the tickets for their victims will take the payment, but not buy the tickets. They may also use their victims' credit card numbers to inflict further damage.

One of the worst scams is a phone racket known as the Canadian lottery scam. The scammers operate out of Canada because of the light penalties there for telemarketing fraud. They target American victims, usually elderly people. All together, victims have lost a total of five billion dollars to this particular scam.

The scammers tell their victims they have won millions of dollars in the Canadian lottery. The scammers say they will send the prizes as soon as the victims pay them the taxes. Many victims have fallen for this, each losing tens or even hundreds of thousands of dollars.

Another common scam is known as the Dutch lottery scam. This one is conducted by email. The emails say that you have won the Dutch lottery and they give you phone or fax numbers to contact to claim your supposed winnings. If victims fall for this, the scammers will ask for their bank account numbers. As with many of the scams, the scammers ask the victims not to tell anyone about their winning the lottery until after the prizes have been delivered. Of course, they never deliver any prizes, but they will raid the bank accounts once they have the numbers.

Just remember, never give your bank account or credit card number to anyone you don't know who contacts you out of the blue. And if someone ever calls or mails you and claims that you've won a prize for a contest you don't remember entering, be very careful. If they tell you that you must keep it a secret that you've won, you should immediately do the opposite, and talk to someone whose judgment you trust.

© High Speed Ventures 2011