An old cash prize scam is back, and it’s coming for your smartphone

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An old cash prize scam is back, and it’s coming for your smartphone
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‘You’ve won $1 million! All you have to do is send us a small fee and we’ll wire you the cash!’

An unexpected phone call with news like that can sound pretty enticing — especially when the caller claims to be from a widely-known company, like Publishers Clearing House.

Of course reading it right now, it sounds ridiculous, but hindsight is 20/20 — especially when it comes to scams. Sure, it may seem obvious after the fact, but the whole idea is to catch you off guard — force you into making a quick, irrational decision — either to avoid a penalty or to cash in your prize.

What makes these scams so effective is that the crooks continue to find ways to remain relevant — using phone calls, text messages, paper mail, email, Facebook messages and pretty much every other form of communication out there — in order to dupe people into thinking the offer or notice is legit.

In fact, a woman was just recently scammed out of $4,500 on Facebook. She received a Facebook message from a friend that led her to believe she had just won a $200,000 lottery, except the person on the other end wasn’t her friend.

Read more: IRS scammers are now using paper mail to steal your money

Beware of these popular cash prize scams

First of all, if you think seniors are the typical target of scams, think again! For whatever reason, smartphones have caused people to let their guard down, and even those who consider themselves tech gurus are falling victim to common scams.

In fact, according to new research by the Better Business Bureau (BBB), younger and more educated people are actually the most vulnerable to scams – 69% of victims are under age 45 and 78% hold a college degree.

Bottom line: no one is safe from scammers — so it’s crucial that you know what to look for and how to protect yourself! 

How the scams work

If you ever get an email, text message or phone call about a cash prize, gift card or other contest that you’ve ‘won,’ it is very likely a scam.

And while lottery and sweepstakes scams are nothing new, they typically become very popular around the holidays, when budgets are tight — and they’re already starting to make the rounds!

‘People are particularly excited about having money around the holidays, frankly,’ Doug Johnson, senior vice president of payments and cyber security policy for the American Bankers Association, told USA Today. ‘The person thinks they have a little windfall going.’

According to the BBB, 10% of people targeted by a lottery/sweepstakes/prize scam reported losing money to the scam.

Read more: This free app blocks IRS scam phone calls

How to protect yourself

If someone calls claiming to be from Publishers Clearing House, know that the group never informs winners of a big prize by phone and never requires winners to pay any type of fee.

If you receive any type of communication about something you’ve won — via phone, text or email — you should always be very cautious before taking any action.

According to the Federal Trade Commission, here are some warning signs of a prize or contest scam:

  • You have to pay.
  • You have to wire money.
  • You have to deposit a check they’ve sent to you.
  • You’re told they’re from the government — or another organization with a name that sounds official.
  • Your “notice” was mailed by bulk rate – if other people received it, it’s likely not real.
  • You have to attend a sales meeting to win.
  • You get a call out of the blue, even though you’re on the Do Not Call Registry.

If you do receive a notice about some type of ‘prize,’ make sure to do your homework to find out if it could be a scam. Simply doing a quick search of the company name and keywords like ‘review’ or ‘complaint’ can help you determine the legitimacy of the offer.

How to spot & avoid similar types of scams

Scammers make themselves look legitimate so you will trust them — and they prey on people’s emotions and fears to get them to make fast decisions, before there’s even time to think it through.

So to help you avoid some common and ongoing scams, keep these tips in mind:

  • Don’t be pressured to make fast decisions.
     
  • Take time to research any organization or group that reaches out to you directly.
     
  • Check them out on bbb.org, search online, etc.
     
  • Never provide your personal information (address, date-of-birth, banking information, ID numbers) to people you do not know. Even with people you do know, do not provide this information via phone, email or text message.
     
  • Don’t click on links from unsolicited email or text messages.
     
  • If you are unsure about a call or email that claims to be from your bank or any other company, call the business directly using the number on your bill or credit card.
     
  • Never send money by wire transfer or prepaid debit card to someone you don’t know or haven’t met in person.
     
  • Never send money for an emergency situation unless you can verify the emergency. 

See all the latest scams and ripoffs.

Scam alert: Beware of fake shopping apps!

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Alex Thomas Sadler About the author: Alex Thomas Sadler
Alex Thomas Sadler is the Managing Editor of Clark.com and Clark Howard Digital Products. Alex is also the host of Common Cents, a new Clark.com series that makes money simple, so you can better understand and take control of your own financial life. Alex graduated from the University of Georgia with bachelor's degrees in ...Read more
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