Imagine the joy in opening a piece of mail that says, “Congratulations, you’re a sweepstakes winner!” You might conjure up light-hearted images of the prize patrol delivering a big check to your front door, but before you get lost in a sea of balloons and confetti, Federal Trade Commission Agent Laureen France wants you to think twice. That piece of mail you’re holding could be a fraud.
For the past decade, France has worked as part of a Western U.S.-Canada cross-border task force helping to catch perpetrators of lottery and sweepstakes frauds. Such scams fall under mass-marketing fraud, which according to the FBI, costs consumers tens of billions of dollars per year on a global level.
One case France is working on is that of Odowa Roland Okuomose, who is wanted on a federal arrest warrant accusing him of masterminding a lottery scam before fleeing in 2008. Okuomose, who was based near Vancouver, Canada, allegedly stole more than $1 million from at least 300 people across the U.S.
How Lotto Scams Work: One Victim's Story
One of Okuomose’s alleged victims is 62-year-old Roslyn Atwood, who has said she lost nearly $3,000. France said her story is like that of countless others who have fallen prey to lottery schemers.
In 2007, Atwood, an insurance broker living in California, received a letter congratulating her on winning $250,000. But unlike the junk mail before it, she said this piece seemed different. It included an actual check.
“It’s one thing to get a letter. It’s another thing to get a check with the letter made out to you for $3,500,” she told CNBC's “American Greed: The Fugitives.”
The check was supposed to pay for the insurance, taxes and delivery charges on her grand prize. Atwood inspected the check and thought it was authentic, so she called the lottery agent from the letter and got detailed instructions on what to do next. She was told to deposit the check and call the agent back. Atwood complied, but first, she called the bank to confirm that the check cleared and was told it did.
The agent then told her to wire $2,600 via a MoneyGram because she must pay taxes and fees up front. Then, Atwood said, the agent told her that “Somebody will be out to deliver [her] prize by noon.”
But nobody showed up and eventually, the agent’s phone number was disconnected. Atwood said she thought to herself, “My God, the check is not good.” Her fears were confirmed when the check bounced. And just like that, she lost $2,600.
Biting the Bait: The Power of a Good Counterfeit Check
“It doesn’t make sense to win a lottery that you’ve never entered,” France said. “If you get a check in the mail and it’s not someone you do business with like a mortgage company or another company, 99 times out of 100 it’s a scam. But some people are so taken with thought that they won money that they lose grasp of what makes sense.”
And the fact that fraudsters make such good checks, that seem to initially clear after being deposited, also convinces otherwise critically thinking people that a lottery scam is legitimate, France said. Atwood, a Ph.D., isn’t the only well-educated person who’s been victimized. Even banks have a hard time realizing such checks are phony until it’s too late, France said.
The best advice France can offer is beware. If you’re told there’s a time limit to respond, or that you must make a payment up front on your winnings, you’re usually dealing with a scam.
Think Twice Before You Sign Up for a 'Free' Offer
Walk into most any mall and you’ll find a contest or customer survey that’s offering something for “free” in exchange for filling out a form with your basic information. But before you sign up, France said, you should realize that nothing is for free. Your information is actually a product.
Certain businesses hire people to analyze information solicited from these free offers, sweepstakes, and customer surveys. They chop it up according to certain demographics and then sell lists to the highest bidder, and you have no way of knowing who that is, France said. It could be a legitimate lead list provider that is registered with the Direct Marketing Association, or a con man.
“Just about anyone can buy a sweepstakes list,” France said, adding that if you search on the Internet for "sweepstakes entrants," you’ll find "people willing to sell you a list of recent entries and if you pay an upcharge you can get lists broken down into categories of recent entrants, by age or whatever.”
She continued: “My advice is for people to understand that, I’m not saying don’t do it, but understand that if you give up your information freely, there is a price for it. You’re losing some control of your information. And if you’re a young person and you think you’re capable of avoiding falling into a trap, OK. But the problem is that your information follows you along, maybe even until you become elderly. At that point, you might be isolated and your judgment might not be as clear. So now you’ve become a lucrative target for these lottery and sweepstakes scams.”
Watch Out for Money Mules
While investigators have gotten better at detecting these crimes by tracking agencies that wire money, the perpetrators of these scams continuously adapt, France said. Within the past three years, a new trend has emerged where fraudsters are now using money mules to cover their tracks.
It works like this. A victim sends money to the mule, who then makes a wire transfer to an offshore account where the con man gets his money. France said these mules most likely don’t really know what they’re doing. “They’re regular folks who need money like you and me," France said. "The hard part is convincing them they’re in the middle of a criminal conspiracy.”
The perpetrators of lottery and sweepstakes scams are innovative and smart, France said.
“There’s nothing that corrupts the soul like greed. And these guys are really good at this and make a lot of money doing it. Short of a jail term, there is no reason for them to stop.”
Watch "American Greed: The Fugitives" on CNBC. It premieres Aug. 15 at 9 p.m. EDT and re-airs at 12 a.m. EDT.