Beware of prize and gift card schemes

Just when you think the red flags relating to a scam should be pretty clear, you hear more troubling reports when it comes to sweepstakes and gift cards.

All the buzz about the Mega Millions jackpot – and the one winning ticket sold in South Carolina that captured a prize worth nearly $1.6 billion – could trigger even more related scams.

The catch is usually this: You must send money for taxes – or buy some products – before receiving that incredible sweepstakes or lottery prize.

The end result: You only lose money, you don’t win anything.

Nearly a half-million people reported some sort of lottery- or sweepstakes-related fraud to enforcement agencies in the United States and Canada in the last three years. Reported losses totaled $117 million in 2017, according to a Better Business Bureau report.

The actual number of victims and losses is likely much larger, as many victims are too embarrassed to report it, according to experts.

Schemes vary. Scammers can reach out by direct mail, social media, phone calls, text messages and smartphone pop-ups.

Many times, the victims are seniors who may have lost a loved one, just gone through a divorce, lost a job or experienced some other hardship. They’re desperately hoping that somehow their luck has changed.

Some con artists even claim to be connected with the established name of Publishers Clearing House Sweepstakes.

Other victims may be told that they must pay a transfer fee to get their winnings sent to the U.S. from Jamaica.

In many cases, callers may say you have to go out and buy gift cards to pay for fees or other charges, if you want to collect a prize for a sweepstakes.

Last year, 2,820 individuals reported sweepstakes and lottery scams to Better Business Bureau Scam Tracker, an online tool for tracking scams.

The median loss was $500. The most frequent method of payment was wire transfer. But scammers are frequently asking for gift cards now.

Some tips from the BBB

❚ Never send money or buy gift cards to cover taxes or other fees to collect a prize.

❚ Be extremely careful of social media: The FBI’s Internet Crime Complaint Center says about one-third of the complaints it receives about sweepstakes/lottery fraud occur over social media. Many victims are contacted through Facebook.

❚ An important point to remember: If you end up caught by one scam, you could end up in a database used by fraudsters and end up receiving more cold call solicitations.

Many times, according to the BBB report, scammers are playing the odds when it comes to contacting seniors. Fraudsters may hope to find victims with mild cognitive impairment, dementia or Alzheimer’s disease.

Seniors also may be easier to contact because they’ve lived at the same location for a long time – and they may simply have a good deal of money saved up.