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Sweepstakes, lottery scams cost Americans more than $111 million in 2017

INDIANAPOLIS, Ind. – A nationwide study conducted by the Better Business Bureau shows fake sweepstakes and lottery scams are costing Americans hundreds of millions of dollars a year.

The study, released Tuesday, shows Americans lost more than $111 million in 2017. The same study shows the BBB received more than 460,000 complaints from Americans who reported losing $330 million over the last three years.

Tim Maniscalo, President & CEO of the BBB of Central Indiana, said fake contest scams are still using traditional methods to trick victims into sending money. But they’re also evolving to keep up with technology by using email, text messages and Facebook.

“Much more sophisticated, well-funded, well-organized,” Maniscalo said. “All I need to do is push a button and send an email to thousands of people. And if I get one or two people to bite on it, I’ve probably made money.”

Fake sweepstakes, contest and lottery scams generally work by promising that a victim has won, or is eligible to win, cash prizes. Vernon Smalling, 91, says he started receiving such letters and phone calls about five years ago.

“They’ll say you have an opportunity to enter and win a lot of money,” Smalling said. “And you send us a fee back and you’re already entitled to win.”

Over five years, Smalling says he sent thousands of dollars to several organizations while waiting to receive millions of dollars in winnings.

“In the last five years, I’ve never received a check from anyone or pay of any kind,” Smalling said.

Smalling says he finally realized he was being scammed when he went to Walmart to send another fee to another fake contest. A heads-up Walmart employee stopped him from sending the money and told him he was a fraud victim. But by then, thousands of dollars were gone from his nest egg.

“It helped put me in a bind,” Smalling said. “No telling how many older people like me, and even younger people that’s put in a bind because they’re taking your money and it’s just fraud.”

The BBB study shows older Americans are actively targeted by fake contest scammers. The majority of scam victims were between the ages of 65 and 74.

AARP spokesperson Jason Tomcsi says older people tend to be more trusting and more reluctant to hang up on callers at the risk of being rude.

“Older individuals tend to have had their phone for a very long time, so their number has been out there a long time,” Tomcsi said. “They tend to be in their same residence for a very long time, so that’s how they can get onto these mailing lists.”

The BBB study also found many fake contest scams originate in Jamaica because many U.S. companies outsource call centers in the country, providing telemarketing training to countless people.

Indiana State Police Captain Dave Bursten says crime fighting technology is always advancing, but that only goes so far when criminal organizations are operating outside the U.S.

“If you’re being asked to send money, that’s your first major warning that this is a fraud,” Bursten said. “As soon as you’re told that you won something for nothing, hang the phone up. Don’t worry about being rude. These aren’t companies, these are criminals.”

The BBB report recommends stronger law enforcement efforts in three areas:

  • In Jamaica, which has seen an upswing in violence related to lottery fraud profits
  • In the U.S., where law enforcement is urged to step up extraditions and prosecutions of overseas fraudsters operating
  • In the U.S. and globally, as law enforcement agencies worldwide are encouraged to take steps toward holding deceptive mailing organizations accountable and stopping fraudulent mail.

The BBB also urges Facebook and other social media to take steps to weed out fake, fraudulent profiles and make fraud reporting easier.

Maniscalo says once a victim sends money to one fraudulent organization, they will likely be targeted by another one. If you have an older family member who receives frequent money contest letters in the mail, there is a good chance they have already sent money that they will never see again.

Vernon Smalling knows he’ll never get his lost money back. But he hopes others will learn from his experience.

“I’d also like to see them have to pay what they are supposed to pay,” he said. “Pay the people they promised.”

The BBB has a Scam Tracker on their website that allows you to look into recent scams in your area. You can also use the tracker to report your own experience if you’ve been the victim of a scam.