An important-looking letter arrives in the mail. You are informed that you just won a cash prize of millions of dollars. The letter includes a check for a “partial payment.” You are instructed to deposit the check and to call a toll-free number to claim the rest of your prize. But you must act quickly, without delay! It sounds too good to be true but you’ve heard of the sweepstakes company before and you’ve seen the advertisements on television where lives have changed because of a similar award. The letter is not asking for money or any personal information – in fact, it accompanies a check made out to you for several thousand dollars! What could be the harm in depositing the check and seeing what happens?
Unfortunately, there could be a lot of harm. I recently reviewed such a letter for a client. I am glad that the client contacted me to determine whether this letter was legitimate rather than calling the company directly. Although I was immediately skeptical, as an attorney I knew that I had to do my due diligence to verify that the letter was indeed a scam. If I had simply dismissed it without conducting a proper investigation and I turned out to be wrong, my client would have missed out on millions of dollars in prize money and I’d have to call my malpractice insurance carrier.
The letter appeared to be from a famous, reputable sweepstakes company. The company’s readily identifiable logo was featured in the center of the letterhead. But a close examination of the letter raised many red flags.
First, the letter instructs the recipient to call a specified telephone number “without delay.” A reputable sweepstakes company would likely give the recipient a reasonable amount of time to respond.
Second, the letter warns the recipient that federal and state laws require that the prize be kept “strictly confidential” and that disclosing to third parties the fact that the recipient is a winner will void the prize. This would mean that the client contacting his/her attorney or other trusted advisor would invalidate the gift. A reputable sweepstakes company would likely expect the recipient to obtain professional advice. Furthermore, a reputable sweepstakes company would have nothing to fear if an attorney were to be involved.
Third, the bottom of the letter featured logos of many famous companies that seemed to have no relation to the content of the letter. The companies ostensibly represented included a lottery, a news publication, and a financial investment firm. It made no sense for all of these companies’ logos to be disjointedly represented in a prize award letter.
I then examined the check for a partial payment of $7,000. It was made out to the client and was from a reputable bank. However, the payer in the top left-hand corner was not the sweepstakes company. Instead, it was purportedly from a different corporation. I had never heard of the corporation so I searched for it on the Internet. The company was legitimate, but it was a shipping / freight company. Why would a shipping / freight company be issuing checks on behalf of a sweepstakes company? Why didn’t the letter provide an explanation for the connection between the shipping / freight company and the sweepstakes company?
I called the shipping / freight company and asked to speak to the accounting department. I explained to the representative from the accounting department that I had a check that was issued to my client purportedly from the shipping / freight company in connection with a sweepstakes. The representative was familiar with the situation. She asked me if it were in the amount of around $7,000 and I confirmed. She stated that it was a fraudulent check, that a scam artist has been issuing counterfeit checks from the company to individuals and that they have blocked payment from such checks. I thanked the accounting representative for her help.
I then did a quick search of the internet for “sweepstakes scams.” I found an article that described many common such scams. The article even quoted a representative from the famous, reputable sweepstakes company who said that notification of prizes over $10,000 do not come in the form of a letter but rather from an unannounced personal visit. The article further described many common sweepstakes scams, one of them that fit the profile of my client’s situation.
The scam artist creates a fake letter from a famous sweepstakes company, figuring that the recipient will let his/her guard down if they think they recognize the source. The letter includes a bogus check with instructions to call the “claims manager.” When the client calls the claims manager, the manager will congratulate the client on winning the grand prize, will explain that taxes and fees must be paid in order to claim the millions of dollars, but that the sweepstakes company is advancing a partial payment to cover the fees. The recipient is instructed to deposit the check and immediately wire the funds to s specified bank account. Once those funds are received, the recipient will receive the rest of the prize.
By the time the banks realize that it is a fraudulent check, the scam artists has already taken thousands of dollars from the recipient. The recipient might further be liable to the company whose identity was stolen and purportedly issued the check. Instead of winning millions of dollars, the “lucky” recipient is scammed out of thousands of dollars.
On the one hand, the letter and the check seemed authentic. The scam artist used psychological methods to encourage the recipient to let his/her guard down, to make it seem initially that there would be no harm in following through since no money or financial information is immediately requested. Furthermore, to ensure rash decision-making, the letter claims that the recipient must act quickly and refrain from discussing the prize with anyone. On the other hand, it did not take much effort or research to confirm that the letter was indeed a scam. However, it is much more difficult for the supposed “winner” to confirm that such a letter was a scam than for a third party to do so because of the emotion involved.
If you ever receive notifications of prizes, unclaimed property, or instructions indicating that you are under any sort of legal obligation to take action, always share such communications with trusted advisors. Often an independent third party is more equipped to evaluate the veracity of such a notification then the person who is already contemplating how to spend the prize money.
KRASA LAW is located at 704-D Forest Avenue, Pacific Grove, California and Kyle may be reached at 831-920-0205831-920-0205.
Disclaimer: This article is for general information only. Reading this article does not establish an attorney / client relationship. Before taking action on any of the information presented in this article, you should consult a competent attorney who is licensed to practice law in your community.