Fraud and Identity Theft: Lottery/Sweepstakes Swindle

by Washington Federal Team on October 17, 2011

This is the fourth and final installment in our four-part series on identity theft and fraud. In this piece, we’ll be focusing on lottery and sweepstakes swindles. The last thing you want is to think you’ve hit the jackpot only to find out that you’ve actually fallen victim to fraud. Find out how to protect yourself and what the employees of Washington Federal are doing to protect you.

Overview of a Sweepstakes Swindle

A consumer receives an official looking letter notifying them that they’ve won a foreign lottery or domestic sweepstakes. They call a telephone number provided in the letter, confirm their identity, and proceed with payment of advanced taxes or fees on the winnings. As a courtesy to assist with the advanced fees, the lottery promoter kindly includes a cashier’s check for the fees. The winner simply wires the money to another bank and their full winnings will be hand delivered soon.

How to Protect Yourself

  • Don’t get caught up in the excitement of winning “big.” It is illegal for foreign lotteries to operate in the United States, including the sale of tickets over the Internet or via letter. Any letter notifying a U.S. citizen that they’ve won a prize is most likely false.
  • A legitimate U.S. lottery or sweepstakes will deduct withholding taxes from the gross proceeds before those funds are delivered to the winner. They’ll never ask for advanced payment and certainly will never send a legitimate check to an unknown person on the hopes they’ll be honest and send the money for taxes. Crooks trusting crooks? It doesn’t happen.
  • Upon receipt of a lottery notice, take it to their local Post Office and turn it over to a Postal Inspector. Many of these letters originate from Canada and the U.S. Postal  authorities in conjunction with the RCMP are best equipped to investigate the crime. Local police are of little assistance.
  • Clients should never “play along” with the fraudsters. The telephone numbers go to throw away phones and are untraceable. At the very least, playing along assures that the intended victim’s name and address will end up on a “suckers list.” You will get bombarded with phone calls and letters offering other opportunities.

How We Will Protect You

  • Most of these counterfeit checks are in amounts between $3,000 and $5,000, just below most bank red flag thresholds. The checks are usually from businesses and banks outside the client’s area.
  • Ask probing, but non-threatening questions. “Did you receive this check in conjunction with a notice that you’ve won a prize or lottery? The Federal Trade Commission has warned us that criminals are victimizing consumers with counterfeit checks.”
  • If we decide to verify the check:
    • We don’t simply call the bank and verify funds. The criminals commonly use valid account numbers and routing information, usually targeting a major business or cashier’s checking account that carries large balances. Of course, there are sufficient funds to pay the check. The only problem is that it’s not a legitimate check.
    • Instead, we place our call to the business that supposedly issued the check. We never use the phone number listed on the check. Instead use one derived from the telephone company or Internet directory service. We are aware that the supposed check issuer may not yet be aware that they’re being victimized.
    • The safest move is to place a hold.
  • If the check turns out to be a counterfeit or uncollectible for any other reason, we complete a Security Incident Report to document the event and follow up actions. Send an electronic copy to the Division Security Officer and the Corporate Security Officer.

We are committed to protecting your financial and personal security. If you’ve found yourself as a victim of this or another types of fraud, please contact your bank representative immediately.

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