Sidney, living outside Tyler, Texas, found his dream letter waiting for him in the mail. It was an announcement that he had won the El Gordo lottery in Spain. All $817,000 of it.
The correspondence looked official and he found the El Gordo lottery existed in Spain. He just needed to send the lottery administrators money for insurance, taxes and a few other assorted expenses, and the winnings would be his. He did.
First he sent a few thousand dollars by Western Union. Then the lottery administrators said they needed a few more. They were always courteous on the phone and sounded like good people, so he sent the additional money.
After a few weeks, Sidney got a call from someone else. A kind person explained that the lottery had been a scam, but that they could help him get his money back. The courteous "recovery agent" just needed a couple of hundred dollars to recover the money Sidney had lost. Sidney sent that money too. After a few weeks, and no money recovered, the "recovery agent" stopped taking Sidney's calls.
Pretty soon Sidney's mailbox began to fill with dozens of letters saying he'd won this or that lottery. Others also said they could help him recover the money he lost.
Sidney never got back any of the $8,500 he sent for the lottery or the recovery. Both were scams.
No legitimate prize, grant, sweepstakes or give-away requires you to pay fees of any kind to claim them. Asking you to pay money before you get your prize signals that you're dealing with a scammer.
Another warning sign of a scam occurs when someone mails you an unsolicited cashier's check. Scammers can create counterfeit cashier's checks that look so authentic, bank tellers often can't tell the difference.
Daniel, living near Houston, received just such a check enclosed with a letter claiming he had won the lottery in Canada. The check was made out to him for six thousand dollars. He was told to deposit it and immediately wire half the money for "processing fees." He cashed the check and sent the scammers three thousand dollars. Several days later his bank discovered the check was a fraud and Daniel was required to pay the money back to the bank.
Just as important as not sending money to claim a prize, is protecting your personal financial information. Scammers will often ask you to provide your bank account number, Social Security Number, driver license number or other sensitive information. Don't do it! If they obtain this information, they may be able to drain your bank account or steal your identity.
Red flags should also go up if someone asks you to wire money. Scammers prefer you wire them money instead of mailing it. Wiring money circumvents mail fraud, which carries serious legal penalties.
If you participate in a sweepstakes, you should be aware that: