Here's How Lottery Scammers are Conning Americans out of Millions

What would you do if you won the lottery? Buy a mansion? Pay off your student debt? Fund a months-long European vacation for your friends and family?

Whatever your dream is, it's a nice scenario to fantasize about. But — and we probably don’t have to tell you this — the odds of that happening are rare (1 in 300 million, to be precise). And if someone calls or emails you with news of an unexpected fortune, you know better than to believe them.

And yet, tons of people do.

A 77-year-old veteran in Western Virginia recently gave $1,600 worth of prepaid gift cards to someone claiming he needed to pay fees and taxes on an $8.5 million sweepstakes prize he'd just won. Meanwhile, in Mississipi, scammers have been calling residents with a "second chance" at winning the Mega Millions jackpot.

All told, reported lottery, sweepstakes and prize scams totaled $166 million in losses in 2020, up from $121 million in 2019, according to data from the Federal Trade Commission (FTC). It was the fourth-largest type of scam in the U.S., with median individual losses of $1,000.

“These things are incredibly common, and the chances of somebody running across them are very high,” says Steven Baker, international investigations specialist with the Better Business Bureau (BBB). “Unfortunately, a lot of people lose a lot of money to them.”

What are lottery scams?

These scams often come in the form of an email, snail mail, phone or social media message saying you’ve won a bunch of money, or something worth a bunch of money, like a car — but that you need to hand over taxes or fees before receiving it. Scammers may instruct you to get them the money via a wire transfer, prepaid debit card or a check they’ve included in the request. Sometimes, they ask victims to send the so-called taxes to a third party, like Western Union.

Scam lottery mail often appears to come from legitimate organizations that run real sweepstakes, like Publishers Clearing House, and will sometimes use the names of people who work actually work there, Baker says. If you've entered sweepstakes before, you might be at a higher risk of getting targeted: The 77-year-old in Virginia who was scammed into believing he'd won $8.5 million told a local news station that he assumed the sweepstakes was legit since he'd entered Publishers Clearing House drawings in the past.

“Anything they can do to make themselves appear more legitimate, they’ll do,” says Steve Weisman, a professor at Bentley University specializing in white-collar crimes and blogger at Scamicide.

Scammers also impersonate organizations like Powerball or Megabucks, especially when the prizes are high — like when the Mega Millions jackpot rose to $1.05 billion in January. And they tend to target older Americans: Last year, the BBB reported that more than 80% of money lost by Americans and Canadians to lottery, sweepstakes and prize scams is from people over 65.

Once they successfully trick someone, scammers usually try to bleed their victim dry. One man in Missouri told the BBB he got a call from Jamaica during the pandemic claiming he'd won $8.5 million from Mega Millions and a Mercedes-Benz, as long as he paid $500 in fees. Various scammers rang him for four months, convincing him to buy $6,500 in gift cards, and even that wasn’t enough — he then got calls from scammers claiming to be Publishers Clearing House investigating scams, the Bureau reported.

Lottery scams during the pandemic

Like everything else, lottery scams have been bolstered by the pandemic.

Scammers have added COVID-19-specific language to their pitches, like safety precautions for delivering prizes and pandemic-related reasons for delays in “awards” reaching recipients, according to the BBB. A fake COVID-19 Census Grant, supposedly from Publishers Clearing House, let victims “choose” their winnings by the amount of fees they would pay.

Plus, families are struggling. Millions of people are still out of work and more than a third of respondents to a new survey from Money and Morning Consult say their situation is either somewhat worse or much worse now than it was in February 2020.

"It's not that people necessarily want a new Lamborghini or stuff like designer clothes," Baker says. "They are thinking of their families that could use help, or helping out with their communities."

Real sweepstakes or total scam?

If you take away one piece of advice, let it be this: You can’t win a lottery you haven’t entered.

Next thing: If someone purporting to have a big pile of money for you asks for payment of any kind, they're lying.

Income taxes are owed on lottery winnings, but taxes are either taken out before you get your money or you pay the IRS the taxes directly, says Gordon Medenica, director of Maryland Lottery and Gaming.

“No lottery would ever ask anyone to send money to claim a prize,” Medenica says.

Finally, remember that the only legal lotteries are those sponsored by a U.S. state. It’s illegal to enter a foreign lottery — so if you get a letter claiming you won the Jamaican lottery, it's fake.

How to protect loved ones from lottery scams

If an older family member is a lottery lover, it might be hard to convince them that they haven't actually won big. Here are some additional red flags you can point out.

One dead giveaway is bad grammar, amateurish graphics and general unprofessionalism, Medenica says. Another clue is an international address: American lotteries only sell within their specific jurisdictions, so if you’re getting a message from somewhere you've never been to, or never even heard of, it’s likely a fraud, he says.

If you receive an email you think might be a scam, don’t click any links or download any attachments. If it comes in the form of a call, hang up. Then contact the lottery or sweepstakes organization directly and ask them if you’ve won anything. A bit of basic Googling may help as well, as the BBB, FTC, lottery organizations, and media often warn against current scams.

It's worth talking to the elderly people in your life about these scams. If they’re getting tons of junk mail, they're probably on mailing lists — which means there’s a good chance they’ve been a scam victim or will become one soon, Baker says.

“These people are experts at gaining your confidence, getting you to trust them,” Baker says. “Of course, that’s easy to do when they’re telling you something you want to hear.”

And who doesn’t want to hear that they’ve hit the jackpot?

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