Knowing the signs of a sweepstakes scam is a good first step to protecting yourself from falling victim to them. But it's also helpful to know what scammers' goals are. Why do criminals use contests and sweepstakes to defraud people, and what are they trying to accomplish by doing so? Here is how some common sweepstakes and contest scams work.
To Steal Your Money
Outright theft is a common goal of sweepstakes scams. In this scenario, the goal of the scam artist is to try to convince you to send them cash under false pretenses.
How Sweepstakes Scammers Steal Your Money
Sweepstakes scammers don't take your money from you, they convince you to give it to them.
Usually, the scam goes something like this: you're contacted by someone who claims that you won a giveaway. All you have to do to receive your prize is to wire them money to cover taxes (or service fees, or shipping, or import fees, or any number of other excuses).
The scammer is usually in a big hurry to get you to give them your money, and they don't want to give you time to think over your response. Act now or lose your prize!
How to Keep Yourself Safe from Thieves
Legitimate sweepstakes do not place strings on their prizes. You won't have to pay taxes to anyone but the IRS.
Also, most legitimate giveaways won't have a problem with you taking the time to receive their response.
Remember, any prize worth more than $600 will require an affidavit before a legitimate sponsor can deliver it.
To Gain Access to Your Bank or Credit Card Accounts
If scammers can't get you to hand them money directly, they look for another way to part you from your cash. One way they do it is to convince you to turn over your bank account or credit card information so that they can clean out your accounts.
How Scammers Get Your Bank Information
One way scammers trick you into giving out bank information or credit card numbers is by running a scam like this: you're told that you have won a prize, but before it can be sent to you, you need to verify your identity. Another story might say that you need to prove that you can afford the taxes on the prize. A simple bank account check would give them the information they need to be able to release the prize.
How to Protect Your Bank Account Information
Legitimate sweepstakes don't need to use your financial institutions to identify you. They don't have to check your income, and they don't have any good reason for doing so.
You might have to fill out an affidavit to claim a prize, but bank or credit card information shouldn't be part of it.
Some sweepstakes sponsors require social security numbers, but sponsors legitimately need this information before releasing a prize. They need to be able to report the prize winner to the IRS for tax purposes.
To Sell You Things You Don't Need
Sometimes, the goal of a contest scam is not to rob you, but to pressure you into buying something that you wouldn't normally buy.
How You Get Manipulated Into Buying Junk
Imagine this: you receive a phone call telling you that you've won a prize, but you need to go to a certain location to pick it up. When you get there, you find out that you need to listen to a 90-minute sales pitch before you can get your prize.
Even worse, the prize may be far less attractive than it sounds at first. For example, a common tactic for this sweepstakes scam was to tell people that they have won one of five prizes, including a new car or a trip.
What they don't mention is that the fifth prize (the one which you and every other victim of this scam actually "won") is nearly worthless.
Furthermore, you'll be very lucky if you manage to walk away from the sales pitch without signing up for a timeshare or for a Ponzi scheme.
How to Protect Yourself From Hard Sells
To Steal Your Identity
Some sweepstakes scammers try to trick you into handing over enough of your personal information for them to steal your identity. They can then use your identity to open credit cards, take out loans, and perpetrate crimes in your name.
One way they do this is by spoofing, or creating a fake sweepstakes page. Instead of entering to win something, you are just handing over sensitive information.
What to Do About Sweepstakes Scams
Some people try to avoid sweepstakes scams by not entering giveaways at all. But most of the time, scammers don't know whether you're a sweeper or not. They contact people randomly, sending out hundreds of thousands of letters or emails, hoping to hit the few people who will fall for their tricks.
Not entering sweepstakes won't protect you -- but recognizing the warning signs of a sweepstakes scam will. Be sophisticated enough to know how to tell legitimate wins from scams and you can safely enjoy entering sweepstakes and contests.
If you are contacted by a scammer, here's where you can report sweepstakes fraud and help shut them down.