11/08/2006 - 10:32 AM

Illegal Lottery Scams - How to Protect Yourself

Using well-respected names in the lottery industry and promises of multi-million-dollar prizes, lottery scams are ever-present. In fact, an online survey conducted by the Louisiana Lottery revealed that 72 percent of players had received an illegal lottery scam prize notification in the last year.

Using telephone calls, e-mails and letters originating outside of the continental U.S., scammers promise players cash and prizes. Players are instructed to pay a fee before claiming any cash or prizes. To sound official, these solicitations often contain special coupon or reference numbers and utilize the names of popular lottery games like Powerball and Mega Millions.

"Because players have caught on to the fact that you need a ticket in order to win a prize, scams may even ask for a ticket number as part of claiming the bogus prize and suggests that the win is based on your purchase of a ticket," said Louisiana Lottery Communications Manager Kimberly Chopin.

Similar scams using other well-known or official-sounding names, such as BMW, Coca-Cola or the "European Lottery," have surfaced across the county, including a mail-based scam that includes a bogus check to supposedly cover the costs of claiming the prize. In these types of scams, the recipient is instructed to wire money to cover the insurance, taxes or other related prize payment costs, which the recipient figures should be more than covered by the check they received. But that isn't how it works.

"The check bounces and the scammer makes off with your real money," explained Chopin.

Tip-Off to the Rip-Off

So how can you tell if a prize notification is a scam? Here are basic red flags:

1. The notification asks you to keep your "winnings" a secret. This ploy is to keep you from sharing the information with family members who may help you realize that it's a scam.

2. You haven't purchased a ticket for the particular game or entered the particular drawing in which the prize was won. Every legitimate lottery business model requires the payment of prizes from funds collected through the sale of tickets. Even the IRS only issues refunds based on taxes already paid! Ask yourself, where did the funds come from in order to pay this prize? Did I physically enter this drawing? Remember, there is no such thing as free money.

3. You are asked to make up-front payments of processing fees, taxes or insurance in order to collect the winnings. This is the foundation upon which all scams are based. No legitimate lottery will ever require up-front payment of any kind from winners to claim a prize. Any withholdings, such as taxes, owed by the winner are deducted from the prize funds.

4. You are guaranteed that you will win a prize if you pay to join a pool. Legitimate lotteries do not require that players join a pool in order to play. Also, legitimate lotteries cannot guarantee that your ticket will win a prize. Even if there was a way to "fix the system" in order to win, this would be illegal and you would be participating in a serious crime!

5. You are asked to communicate by phone, mail or e-mail with an overseas entity in order to claim the prize. Gambling across state lines through the Internet, phone or mail is illegal for a reason- to protect U.S. consumers. Scam artists that set up shop overseas are more difficult to prosecute.  Also, online gambling companies are not regulated and often sell their customer lists to others, including scammers.

"The bottom line is that if it seems too good to be true, it most likely is," said Chopin. "With identity theft on the rise, players should never give credit cards, social security numbers, bank account numbers or other personal information to anyone promising a lottery prize.

Lottery Winner Notification Procedures

The vast majority of legitimate jurisdictional lotteries, including the Louisiana Lottery, do not know the names of prize winners until they claim their winning ticket. For this reason, the Lottery will NEVER contact game prize winners directly. Prize winners know that they've won from their ticket-NOT through an e-mail, letter or phone call.

The two exceptions are second-chance drawings and online promotions for Club Lotteaux members, Facebook fans and Twitter followers, in which players have given the Lottery their contact information as part of their entries. In these instances, winners may be contacted by phone and registered mail by the Lottery, but will NEVER be required to pay anything in advance to collect their prize.

"Our Lottery claim form does request a social security number which is needed for prizes greater than $600 to be reported for tax purposes," explained Chopin. "But most people either present the form in person or mail it to the Lottery's address which can easily be confirmed over the Internet or phone book."

As the prevalence of e-mail communication continues to grow, so will the number and frequency of e-mail scams, including those promising lottery winnings.  And it's a profitable venture. In the Lottery's survey on illegal Lottery scams, seven respondents admitted to having been victimized, with one losing $2,800 in hopes of collecting $150,000 and another out $3,000. Nationwide, the Federal Trade Commission estimates consumers are losing about $120 million on these types of scams each year. 

The best advice is to hang up the phone, hit the delete button or throw away the phony prize letter. Players can also report suspected scams to the Louisiana Attorney General's Office which has set up a special division to pursue these criminals. (Listed below are a few sites that post scam information.)

The Lottery also produces a brochure entitled "How to Avoid Lottery Scams," which describes tactics used by scam artists operating illegal lotteries. Copies are available in Lottery play centers at retailers statewide or by downloading below.