Although many sweepstakes scams involve the sale of trinkets and give away prizes, there are many more that offer little but lies and deceptions. These are called “advance fee” scams and frequently involve illegal use of the postal service and telephone service in order to promote their scheme through the use of 900 numbers. The thing to remember is that for every minute on the phone to a 900 number, going through menus or waiting on hold, charges are racking up on your phone bill.
This type of scam has become a huge problem for authorities and what makes it more frustrating is that this is not a new type of crime. When you consider how much it costs to mail a notification to everyone in the US and Canada, you would realize that it wouldn’t be profitable unless money was being made on the scam.
Although the Attorney General brought charges against Direct American Marketers, Inc., one of the largest direct mail sweepstakes operations ever formed, out of the millions of sweepstakes notifications sent nationwide, hundreds of millions of dollars were earned through 900 numbers. When they finally declared bankruptcy in 1986, only $3 million was collected that was split between 30 states.
In another case between 1994 and 1997, Rhode Island was hit especially hard in a case where it was found that 65,000 people spent over $1.5 million calling 900 numbers to claim prizes at $3.98 per minute. These calls lasted 7 to 10 minutes while people navigated an automatic voice menu which cost them $20 to $40 per call and, in the end, they received nothing.
It’s important to remember that people involved in these types of scams count on people being too embarrassed to spread the word. Additionally, for those who receive some trinket they often feel that at least they weren’t totally fleeced. Rationalizing actions and decision is what these con artists count on to keep the con running. However, the minute upfront money is requested in the form of taxes, release fee, or processing fees, a red flag should be raised.
Occasionally scammers are caught and do receive jail time. In one case a con artist claimed to be a representative for Office Depot. To collect the grand prize victims were told they had to file a 1% taxation fee with the IRS. Since most people didn’t know how to do this he offered to help. He told them to send a cashier’s check and even had an Office Depot sounding address but, in fact, that too was bogus along with the name he used in the call. After pleading guilty to wire fraud he received a 30 year sentence. There are many other cases in the courts where individuals who run these programs are being incarcerated, as they should be, but often the damage has already been done.
Education efforts are now circulated through governmental and independent agencies such as the State Attorney General’s Office, the US Post Office, AARP, Senior Associations, and the media. Unfortunately, many of the most vulnerable to these types of scams just want to have a little fun and don’t see it as the crime it is. After all, they’ve earned it. Today, many younger consumers are also now falling prey to these types of scams. It is currently an epidemic that is out of control and only by working together can we protect each other from its influence.