Scam of the day – February 27, 2017 – FTC settles phony prize scam charges

The Federal Trade Commission has closed down a mass mailing phony prize scam and settled charges with one of the perpetrators of the scam, Ian Gamberg, while continuing to pursue charges against other defendants involved in the scam.

Hundreds of thousands of primarily elderly people received mailings informing them that they had won a prize in a contest they had not even entered.  According to the mailers, “… this is NOT a preliminary or qualification letter of cash prize status; YOU HAVE WON A CASH PRIZE!” The notices contained logos, stamps and seals that made the letters look legitimate.  The people receiving the letters were prompted to fill out a form with personal information and return the form to a Post Office Box in the Netherlands along with a payment of $25 as a charge to claim their prize.

Of course, there was no prize and to make matters worse, the personal information of the victims of the scam was sold to other scammers who sent similar prize scam letters to the victims who often paid the amounts requested multiple times.

This particular scam was brought down by joint efforts of consumer protection and law enforcement agencies in a number of countries including Australia, Belgium, Canada, the Netherlands, Nigeria, Norway, Spain, the UK and the United States.

TIPS

It is hard to win a lottery or contest and it is impossible to win one that you have not even entered.  That should be the first indication when you receive such a letter that it is a scam.

In addition, no legitimate lottery or contest requires you to make a payment to obtain your prize.   Although the request for payment under the guise of the payment being for income taxes, processing fees or shipping and handling charges may seem legitimate, they are not.  While income taxes are due on lottery and contest winnings, no sponsor of a lottery or contest collects taxes from winners.  The sponsors of legitimate contests and lotteries either deduct taxes from the winnings or pay the entire prize and leave the payment of taxes to the winners to do on their own.

Even if the contest or lottery appears to have been sponsored by a well-known company with which you are familiar, if the contest or lottery requires you to make a payment to obtain your prize, it is a scam. Scammers often use the names and easily counterfeited logos of legitimate companies to make their scams look genuine.

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