What Is A Prize Scam?

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I get asked this a lot, what is a prize scam?  Let me explain.

what is a prize scamYou have just won $10,000!  Or $10 million.  Or, perhaps, it is a luxury vacation or a gorgeous diamond ring?  All you have to do is send some money to cover the taxes, processing fee or shipping and handling.  Ahhhh.  No. Most likely, it is a prize scam, and you will soon discover that it isn’t worth a whole lot, that is, if you end up with a prize at all.  Remember, if you have to pay to get your prize, it’s not a prize.

What You Need To Know

Who wouldn’t want to win a prize?  But, prior to dropping in a fast entry or following instructions to claim a prize, here are some things you need to know:

Legit sweepstakes are free and based on chance.

Asking to pay or buy something to enter or boost your odds of winning, is illegal.

Prize promoters may sell your info to advertisers.

what is a prize scamWhen you enter a drawing or contest, you’ll likely get more telemarketing calls, spam email or promotional (junk) mail rather than a prize.

Prize promoters must tell you specific things.

Telemarketers are legally obligated to inform you of the odds of winning, the value or nature of the prizes, that it’s free to enter and the terms and conditions to claim a prize.  Moreover, sweepstakes mailings are required to tell you that you do not have to pay to take part.  Also, they cannot tell you that you are a winner unless you have truly won a prize.  And, they are not legally allowed to include bogus checks that do not state clearly they are non-negotiable and have zero cash value.

Spotting Prize Scams

Many contests are run by honorable marketers and non-profits.  However, daily, people are cleared out of thousands of dollars due to prize scams.  So, here are a few signs to watch out for:

You’re required to pay.

Authentic sweepstakes do not require you to buy something or pay a fee in order to enter or boost your chances of winning – that includes paying “processing fees,” “shipping and handling charges,” or “taxes” in order to get your prize.  There is also no valid reason for giving somebody your credit card number or checking account number in reply to a sweepstakes promotion.

A contest based on skill, where you do things like reply to questions correctly or solve problems can request you to pay.  However, these contests are likely to get more expensive and difficult as you move forward, leaving contestants with diddly-squat to show for the effort and money they put into it.

You’re required to wire money.

what is a prize scamYou might be required to wire money to a representative of “Lloyd’s of London” or some other renowned company – frequently in a foreign country – to “secure” the delivery of the prize.  Do not do it.  Wiring money to someone is similar to sending cash.  Once it’s been sent, you cannot trace it and you’ll never get it back.  The same holds true for sending a money order or check by courier or overnight delivery or depositing money onto a prepaid debit card.

They require you to deposit a check they have sent you.

After you do, they will ask you to wire some of the money back to them.  The check will wind up being a fake, and you are required to pay back any money you withdrew to the bank.

They tell you they are from the government or another official-sounding organization.

what is a prize scamThey may say they are from an official agency such as the Federal Trade Commission (FTC) and are notifying you that you have won a federally run sweepstakes or lottery.  Or, they may say they are from the “National Sweepstakes Bureau or use an official-sounding title such as “The National Consumer Protection Agency.”  But, they are imposters.

The FTC does not supervise sweepstakes, and no genuine sweepstakes company or federal government agency will get in touch with you to request money in order to claim a prize.

Other scammers may impersonate a company such as Reader’s Digest or Publishers Clearing House, which operate genuine sweepstakes.  Watch for signs of a scam; however, if you are still doubtful, get in touch with the genuine companies to determine the truth.

Your notice was mailed to you via bulk rate.

It’s highly unlikely that you have won a big prize if your notice was mailed via bulk rate.  Loads of other people got the identical notification too.  Check out the postmark on the postcard or envelope.  Do you remember even entering?  If you don’t, you likely didn’t.

You are required to show up at a sales meeting to win.

If you agree to show up, you will more than likely have to suffer through a high-pressure sales spiel.  As a matter of fact, any insistence to “act now” so you do not miss out on a prize is a sure sign of a scam.

Despite being on the Do Not Call Registry, you receive a call out of the blue.

After you have registered your telephone number for free at donotcall.gov, undesired telemarketing calls should end within 30 days that is if it doesn’t come under one of the exemptions.  Otherwise, you should not receive calls.  It’s illegal.

I love this story!!  Check out this awesome video on how this 80-year old woman scammed her scammer!!!



Foreign Lotteries

Sometimes, you will receive a letter announcing that you won a foreign sweepstakes or lottery. Most likely, the announcement will include a check.  It’s a fake check scam.  Or, your announcement will state they are presenting a chance for you to enter a foreign lottery.  Reality is that even if you did get your name entered, it is illegal for you to play a foreign lottery.

Prize Offers Via Text Message

what is a prize scamYou receive a text message that states you have won a gift card or some other free prize.  When you head over to their website and key in your personal information, you will additionally be asked to sign up for their “trial offers” – offers that result in monthly charges.  Even worse, the scammer can sell your info to identity thieves.

When you receive a spam text offering a free service, gift card or any gift at all, report it to your phone carrier and then delete it.  Do not answer or click on any links because that will install malware onto your phone or computer and head you over to bogus websites that appear real, but are businesses set up to steal your personal information.

The Bottom Line

Scammers do not abide by the law.  To avoid getting scammed, you must do some research.  If you are doubting a promoter or contest, try keying in the product or company name into a search engine with words such as “scam,” “review,” or “complaint.”  Also, you might want to investigate by contacting your local consumer protection office or your state attorney general.

Remember, many dubious prize promotion companies are constantly moving and don’t stay in one place for very long.  Just long enough to set up a track record, so if no complaints turn up, there is no assurance that the offer is authentic.

So, I hope I’ve answered your question, “What Is A Prize Scam?”  Have you or someone you know ever been a victim of a prize scram?  I’d love to hear from you.  Please leave your comments below.


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  1. lynnsamuelson

    I’m sure that there are a number of these types of scams out and I’ve even gotten a few myself in the past, but I’m amazed that anyone would ever pay money in order to receive a prize. Anything involving a foreign government is also a huge red flag. Regarding I receive texts sometimes from places I never registered with and have added my name three times to the Do Not Call registry. The phone texts still keep coming. do you have any other suggestions about how to stop these texts other than blocking them. I’ve done that but then new ones are sent. Thanks!

    • Barb

      Hi, Lynn!  Thanks for dropping by and sharing.  I really love hearing from my readers.

      It’s sad, but people fall these scams all the time.  It’s usually people who are desperate for money for whatever reason.  These scammers are very convincing and, when people are desperate, they ignore the signs.

      As a matter of fact, I’m in the midst of writing an article on Text Spam so keep a look out for it.  Aside from registering with the Do Not Call Registry, you can report these spam texts to your carrier.  Simply copy the original message and forward it to the following number 7726 (SPAM), and it is free.

  2. Rosa

    Hi Barb,

    This is something I’ve seen several times from my mail. I received a notification from some company informing me that I’ve won several thousands of dollars. The first time I received it I googled it and learned it was a scam. I still receive this scam mail. It annoys so much that I still get this in the mail.

    I love that story with the elderly woman in the video. She outsmarted that scammer. Good for her!

    Thanks for sharing this.

    • Barb

      Hi, Rosa!  Thanks for dropping by and sharing.  I love hearing from my readers.

      Good for you that you did your research before you tried to claim that prize.  A lot of people just assume that’s it real.

      I agree with you.  That woman was awesome!  She was really on her toes for an 80-year-old.  I just love it.

      Kudos to her!

  3. Michel

    So I would have been a millionaire if I had won everything that I have been told I have won.

    Every week, I get emails or SMS’s saying I have won a lot of money, and I wish it were true, but I know they are scammers preying on the innocent, and reading your article was a real eye opener.

    Truth be told I never won anything.

    Instead of chasing quick riches people should rather focus on building their own success and with some work and effort you won’t need to be chasing that next big prize or scam.

    • Barb

      Hi, Michel!  Thanks for dropping by and sharing.  I really love hearing from my readers.

      I’m glad I was able to increase your awareness.  The reason why this scam works so well and is still prevalent is because people still fall for it.  Typically, it’s someone who is down to their last dollar and is desperate, and end up in a worse situation than when they started.

      Hopefully, this article will help expose these scammers.

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