Just when you think the red flags relating to a scam should be pretty clear, you hear more troubling reports when it comes to sweepstakes and gift cards.
All the buzz about the Mega Millions jackpot – and the one winning ticket sold in South Carolina that captured a prize worth nearly $1.6 billion – could trigger even more related scams.
The catch is usually this: You must send money for taxes – or buy some products – before receiving that incredible sweepstakes or lottery prize.
The end result: You only lose money, you don’t win anything.
Nearly a half-million people reported some sort of lottery- or sweepstakes-related fraud to enforcement agencies in the United States and Canada in the last three years. Reported losses totaled $117 million in 2017, according to a Better Business Bureau report.
The actual number of victims and losses is likely much larger, as many victims are too embarrassed to report it, according to experts.
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Schemes vary. Scammers can reach out by direct mail, social media, phone calls, text messages and smartphone pop-ups.
Many times, the victims are seniors who may have lost a loved one, just gone through a divorce, lost a job or experienced some other hardship. They’re desperately hoping that somehow their luck has changed.
Some con artists even claim to be connected with the established name of Publishers Clearing House Sweepstakes.
Other victims may be told that they must pay a transfer fee to get their winnings sent to the U.S. from Jamaica.
In many cases, callers may say you have to go out and buy gift cards to pay for fees or other charges, if you want to collect a prize for a sweepstakes.
Last year, 2,820 individuals reported sweepstakes and lottery scams to Better Business Bureau Scam Tracker, an online tool for tracking scams.
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The median loss was $500. The most frequent method of payment was wire transfer. But scammers are frequently asking for gift cards now.
Some tips from the BBB:
Many times, according to the BBB report, scammers are playing the odds when it comes to contacting seniors. Fraudsters may hope to find victims with mild cognitive impairment, dementia or Alzheimer’s disease.
Seniors also may be easier to contact because they’ve lived at the same location for a long time – and they may simply have a good deal of money saved up.
Scammers of all kinds are more frequently demanding payment via gift card, particularly iTunes and Google Play cards, according to the Federal Trade Commission.
Gift and reloadable prepaid cards are now the No. 1 reported method of payment for impostor scams, according to the FTC.
About 54 percent of people who reported losing money to a scammer impersonating the Internal Revenue Service or other government agency said they paid with a gift card. By contrast, about 16 percent reported using a wire transfer and 5 percent reported that the con artists demanded cash, according to reports made to the FTC from January to September of this year.
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Consumers who lost money to phony loan programs also say that scammers requested payment on gift cards, such as Best Buy cards, too.
And more scammers targeting the workplace are asking for gift cards, as well.
The scammer who is impersonating a company executive or other person of authority often requests that multiple gift cards be bought for either personal or business reasons, according to an October report by the FBI’s Internet Crime Complaint Center.
Maybe a so-called manager suggests buying gift cards for a work-related function or as a present for a special personal occasion. But a scammer is only impersonating the manager, and the gift cards are then used to buy goods and services that may or may not be legitimate.
In some cases, the scams may involve wire transfer payments.
Real estate companies, legal firms, religious organizations and tech firms have been targeted by such scams.
A total of 1,164 complaints involving businesses and gift cards were filed with IC3 between Jan. 1, 2017, and Aug. 31, 2018 – a measurable uptick from 2017.
The total losses were about $1 million. The average reported loss per incident was less than $900.
Businesses are being warned to watch out for any email, phone call or text message requesting multiple gift cards, even if the request seems typical.
It’s a good reminder as we head into the holiday season, too. If the boss suddenly seems generous with the gift cards, double-check whether that request to buy gift cards for the staff is really coming from the boss.