Protecting Yourself from Lottery Scams

Who wouldn’t love winning a million dollars, a fancy new car, or the chance to take a dream vacation? In this type of fraud, scammers take advantage of such desires, imitating the many legitimate sweepstakes and contests.

Scammers may contact you through mail, email, social media, a text message, or even a phone call, congratulating you on “winning.” All that's required to collect your prize is a small fee to cover taxes, shipping, customs charges, or some other expense.

They may also claim that they need personal information to prove your identity or that they need bank account details to deposit your “winnings.” This is the information they subsequently use to drain your account.

HOW TO PROTECT YOURSELF

• Ask yourself if you entered a particular contest. If you didn’t, the prize notice is likely a fake.
   
• Don’t wire money; mail cash, checks, or money orders; or share gift card numbers with someone claiming to represent a sweepstakes or lottery. A legitimate contest would not ask you to pay to collect your prize.
   
• Don’t deposit a check from a sweepstakes or lottery without doing due diligence, such as researching the sender’s name on the Better Business Bureau website to validate the source of the request. Also note that many scams will ask you to send part of the payment back. Legitimate sweepstakes send only certified checks to prizewinners.
   
• Don’t provide personal or financial information to anyone who contacts you about a lottery prize.

QUESTIONS TO ASK YOURSELF

• Is there a sense of urgency or a strict deadline to redeem the prize?
   
• Did I enter a sweepstakes or lottery?
   
• Was I told that I must pay (a small fee) in advance to get the prize?
   
• Did I receive any advance payment in paper form, such as a check or money order?

Staying alert to these warning signs can keep you from becoming the next target. By taking a moment to verify unexpected prize claims, you can protect both your personal information and your hard-earned money.

Resource: Charles Schwab Advisor Center. The information provided is not intended as tax or legal advice; Individuals are encouraged to seek advice from their own tax or legal counsel. Neither the information presented nor any opinion expressed constitutes a representation of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.