Everyone likes receiving unexpected money. And while getting a notification that you won money could be good news, it can also put your finances in danger if you’re not careful.
Sweepstakes and unexpected money scams are not new. In fact, in 2020, the Federal Trade Commission (FTC) received more than 116,000 reports of fraud involving these types of scams. Last year, the average loss for scams involving fake prizes, sweepstakes and lotteries was around $1,000 per person and totaled around $166 million collectively.
Know what to look for next time you get a notification of unexpected money or winnings.
In an unexpected money or winnings scam, scammers will contact an individual by text, email, phone, or by mail to let them know that they have won a prize and are due money. The scammer may claim you have inherited money, won a lottery or sweepstakes, or are getting a refund from the government.
The catch, though, is that they will require you to pay a deposit, taxes, or customs duties upfront in order to claim your winnings. Most likely, they will ask for this payment in the form of a wire transfer, gift card, prepaid debit card, bitcoin, or cryptocurrency. Once they receive payment, the scammer will disappear and you’ll be out the money you paid them.
Scammers will use many ways to convince you that your winnings are legitimate, but if you look for these red flags, you can protect yourself from falling for an unexpected money scam:
While all unexpected money or winnings scams follow similar patterns, there are a few specific varieties of this scam that you may run into. Here are some of the most common ones.
You may already have heard about the Nigerian prince scam over the years. It works by someone contacting you, claiming to be a prince from Nigeria or another country experiencing political unrest. Because of this, the prince (the scammer) will claim that they cannot access their money, but with some financial help from you, the money will be released. He’ll also offer his thanks by promising to send you a generous reward for helping. Of course, none of this is true, and your money will disappear with the fake prince if it is sent.
In this scam, the person who contacts you claims to be a lawyer or banker and has some great news. You have just inherited money. The bad news is that the money is tied up in red tape, and you have to pay an expert in order to free it up. Once you pay the bill, the scammer will have your money and it will be gone for good, along with the fake inheritance.
There are many variations to this type of scam. The scammer will claim that you have just won a lottery or sweepstakes. They may use the name of a made-up company, or they could use the name of a well-known sweepstakes like Publisher's Clearing House. As with the other unexpected money scams, you will be asked to pay a fee to get your winnings which don't exist, and once you do, the scammer will take off with your money.
In this scam, the scammer will claim that they are representing the IRS and that you have a tax refund waiting for you. To get your refund, though, you will have to pay an administration fee. But there is no refund, and this is just a way for the scammer to steal your money.
If you think you have been contacted by a scammer claiming that you are due money or winnings, the following tips will help prevent you from becoming a victim:
If you have fallen for an unexpected winnings scam, you do have a few options. The best thing you can do is let people know so that authorities can get to work catching the scammer or alerting the public so that others don’t fall victim to the scam.
If you paid with a gift card, prepaid debit card, or cryptocurrency, you won't have the option to stop payment. But, if you paid with a credit card, debit card, or check, you may have the option of stopping the payment from going through to the scammers. By doing so, your financial institution will help you make the right steps to save yourself from getting scammed. If you made the payment by wire transfer, call the wire transfer company and tell them it was a fraudulent transfer. You may be able to stop the transfer.
You'll want to report the scam to the authorities as soon as you can. Go to ReportFraud.ftc.gov and report it to the FTC or contact your state attorney general and your local consumer protection office. If you received the notice in the mail, contact the U.S. Postal Inspection Service. And, finally, if you gave any personal information to the scammer, report it at IdentityTheft.gov.
If the scammer contacted you through a social media platform or a chat app, contact the business that owns the platform and give them details about the scam. They may educate other users about the scam or create safeguards to prevent anyone else from falling victim to it.
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