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Lottery Rip-offs: When Winning Means Losing

10 ways to spot a lottery scam

lottery  Scam alerts

Oliver Cleve/Getty Images

If you didn't enter a contest, you didn't win — no matter what you may be told.

En español | When the Powerball jackpot reaches the Gross National Product figure of some countries, it's hard to resist spending $2 on six numerals — even with the odds of winning at 1 in 292 million.

But in umpteen conning contests, lottery and sweepstakes scammers seem to have their own winning number: your age.

Are you between 55 and 64? You're nearly twice as likely to fall for prize promotion schemes compared with other Americans, according to Federal Trade Commission data. People 65 and older have almost triple the "gotcha" rate.

It's become too familiar: You get an email, phone call or letter saying you've won a jackpot, often a foreign lottery. But there's a caveat: To receive your winnings, you're told, you have to first pay taxes, or fees for insurance or other expenses. It's usually requested via a wire transfer or Green Dot prepaid Money Pak card. You send off the money, and guess what? No payout ever arrives.

Reported losses from these "winnings"? More than $1 billion a year. And you can be sure the figure's much higher, because most victims — particularly older ones — are too embarrassed to admit to getting duped by a scam that reigns among the most prevalent.

So when lottery fever hits, know these ten facts to prevent getting burned.

1. Any lottery or sweepstakes requiring upfront fees is a scam. The one exception involves "skill contests" (solving puzzles, submitting recipes, etc.), where participation may legally require a small entry fee or purchase.

But know that if you do win a legitimate contest, a portion of your jackpot may immediately be withheld for federal and state taxes, and you're responsible to pay any balance when filing that year's taxes (the IRS and your home state are notified of winners).

2. If you didn't enter a contest, you didn't win — no matter what you may be told. If you play Powerball or a state lottery and win, it's up to you to produce the ticket as proof; lottery officials don't contact you.

3. If congratulations come with a check — with instructions to deposit it and send a portion back — the check's a fake. No legitimate contest issues partial-payment checks and asks for a portion back. Counterfeit checks are often used in lottery scams. Your bank may accept them and credit your account. But if you forward any funds, you'll lose them and will be on the hook for any other money drawn from that deposit.

4. Beware of regional rip-offs, too. Scammers sometimes set up phony state lottery websites (find real state lotteries at this webpage). The latest spin: county-themed cons, like one recently targeting seniors and veterans and purporting to be from San Diego County in California.

5. The $7,000-a-week-for-life prize in the popular Publishers Clearing House contest will be announced soon and mailings will follow months later. So prepare for a new season of scams claiming you've won the PCH.

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6. Duped once? You'll be targeted again, maybe right away. If you send upfront fees for a contest, expect to be hounded for additional fees to claim that same nonexistent prize. It may be touted as a larger jackpot than originally promised. And your name will likely find its way onto scammer-shared "sucker lists" that detail names, contact info and even specific pitches that victims fall for, for use in future fake winning notifications.

7. Clues to a sweepstakes swindle are often in the fine-print "rules." It's a sure scam if any of the following required info is missing: start and end dates; judging date; methods of entry including judging criteria; type of proof of purchase required; description of prizes and approximate retail values; legal disclaimers; and sponsor's name and address. Even with these included, it's wise to do an online check of the contest name before entering.

8. If a "skill" contest seems too easy, it may be a scam. Likely the real purpose is to collect entry fees and personal information. Legit contests only ask for your name, address, email or phone number. It's identity thieves who seek more sensitive data, such as Social Security numbers and driver's license and bank account numbers.

9. Told you're "guaranteed" to win something? Another scam, since that claim is usually illegal. The same applies to simulated checks or items of value in sweepstakes or skill contests that don't prominently bear the words "SPECIMEN" or "NON-NEGOTIABLE."

10. Threatened with violence or arrest if you don't pay upfront fees? That's the calling card of Jamaican scammers, who've made up to 30,000 phone calls per day to American lottery "winners." They rely on sucker lists for your name. They call saying they're at a public place near your house and are coming to rough you up (they find out about that place through online maps). Incoming calls with area code 876 indicate they're still in their homeland, though — too far for a beating or to apply handcuffs.

Sid Kirchheimer is the author of Scam-Proof Your Life, published by AARP Books/Sterling.