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Don't fall prey to the 'foreign lottery' scam
The U.S. Postal Service and the AARP have teamed up to warn people about a foreign lottery scam by sending out mailers like this.
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You know the old saying -- if it's too good to be true, it probably is? We all know it. But that hasn't stopped people from falling for a new so-called foreign lottery scam. It goes like this -- you get an email or letter or a phone call from someone who informs you you've won a foreign lottery, now all you need to do to claim your prize is send money to cover the taxes and fees. This scam is so pervasive that the U.S. Postal Service and the AARP have teamed up to warn people about it. The two organizations have been sending out mailers -- mostly to homes with older Americans -- warning people of the con. Doug Shadel, a former fraud investigator who now serves as director of AARP's Washington State office, joins us to discuss the scam.
"What [scammers] basically do is they call up people who are over the age of 70. They tend to be women who are lower-income folks. They tell them the good news that they have just won the Jamaican lottery, or some kind of a lottery, worth $8 million and all you have to do to get that money is to pay the taxes or the legal fees of $500 or $800 and you're on your way. Well, of course, there is no lottery and you're just sending your money to thieves basically," says Shadel.
Why aging boomers are more prone to scams It seems like con artists are dreaming up new scams every week -- and often seniors fall prey to the trickery. But why?
Shudell says the scam has been around for years, but the difference now with these folks is how relentless and aggressive they are.
"In the beginning, [the scammers] are always nice. They're always saying, 'I'm going to pray for you.' I'm asking a lot of personal questions and really being caring. But the minute you stop sending money, that's when it gets really nasty," says Shadel. "Actual direct threats of coming over there and doing bodily harm to people. This really has the effect of frightening folks. It would frighten younger folks, but people who are in their 70s or 80s are really frightened by those kind of things," says Shadel.
Shadel says victims of these types of scams get involved in what's known as the rationalization trap. When victims do something like this, they think on the one hand they are smart, but on the other hand, they did something stupid. How do you resolve that conflict? Shadel says people can either recognize that they were stupid (a difficult thing to do) or say they are smart -- what they did was not stupid -- and continue to do it to prove to the world that it wasn't stupid. The latter is what happens to victims in these scams; they throw good money after bad.
Shadel says he hopes the mailers that the Postal Service and AARP have been sending out help people from falling prey to foreign lottery con artists.
A few years ago I received a call from my grandmother asking me where I was. This was very strange since I live and work in Japan and she has never called me before. I told her I was still in Japan. She quickly said "Thank God" and hung up. I contacted my parents to find out what was going on and was told that someone had call up my grandmother pretending to be me. They told her that I was traveling in Canada and that I had been arrested for something or other. Someone else quickly got on the phone pretending to be a police officer and explained that I needed $5,000 wire transferred to me in order to make bail and pay the fines. The person that was pretending to be me was "in tears" and wasn't on the phone for very long. So my grandmother was unable to ask some key questions that would have verified if it was me or not. She started the wire transfer, but then called my cell phone to make sure it was really me or not. Luckily she was able to stop the wire transfer and get her money back.
Between 2001 and 2007 my mother, now 93, was having monthly withdrawals made from her account without her knowledge. They started at $7 and increased to $16.95. The company was called EP9 Essentials. After several calls to them and to the BBB, they agreed to return one year of withdrawals. One of their phone staff let it slip that my mother's 'account' went back to 2001; I persisted and they returned all withdrawals. If my mother had not noticed, the withdrawals would surely be continuing. The company had no evidence that my mother opened the account, and they couldn't tell me what services or products my mother had received. The BBB told me that there are hundreds of complaints, but the company apparently operates just below the illegal threshold. Their scheme may not be spectacular, but it is succeeding with artful guile. They take just a little from many people. If you can help to stop this kind of scheme, you will be doing many elderly a great service.
My mom is 82 and has literally always known exactly where every penny of my parents approximately $2 million estate is. So, I was literally in shock when I arrived at her home, at her urgent and secretive prompting, to find out that she needed my help getting to her bank to wire $150,000 to a bank in Costa Rica to pay the luxury tax on a $350,000 clearinghouse sweepstakes. She had already sent $3,500 to the bank to supposedly take out a bond with Llyods of London to ensure proper delivery of her award.
What made this scam so insidious and effective, was the fact that it was perpetrated by a very professional sounding man posing as an FTC investigator trying to apprehend these Jamaican or Nigerian scam artist. He opened by asking if she had been receiving lots of calls from people claiming that she had won something. Of course she acknowledged that she had been.
Then he offered a very believable explanation of who he was and how she could be invaluable in helping the FTC apprehend these scammers. However, he emphasized that she could not tell anyone about her work with them, or it could compromise their investigation. She took this quite seriously and would not discuss any of this with me over the phone. Even when I arrived at her home, she spoke softly about the details. And this is a very sharp woman who does not trust anyone when it comes to her private matters.
Here is the clever part. The imposter went on to explain the details of the scam. He explained that a legitimate clearinghouse company's database had been hacked into, and roughly 5000 names and numbers had been stolen by this Jamaican group. Thats who had been calling her.
Now, he explained, coincidently, she was a legitimate prize winner and could redeem her prize after she paid a luxury tax. But, this was cleverly woven into his enlisting her as someone contributing to a serious federal investigation.
Strangely enough, the man actually gave her his name and number. I was able to call him back and talk to him. But, once I started asking questions, he interrupted saying that he had to go into a meeting.
I had to explain the reality of the situation to my mom about five times. It clearly took a psychological and emotional toll on her. My heart dropped as I began to think that I could no longer allow my mom to live alone.
I could see she saw the light and we went out to lunch at one of her favorite spots. I called the FTC and Lloyds of London afterwards and found out that indeed, this was a common scam.
I definitely want to warn people about this one.
I could not think of a scam more sophisticated, complex, cruel and more persistent than this sweepstakes phone scam. I've read several complaints posted at http://www.callercenter.com and the victims believe the scammers are their friend, which makes the scam even sadder.
I get a lot of these sorts of scam offers at my yahoo email address. I actually documented a lot of them a couple of years ago:
http://shacksboro.blogspot.com/2011/08/my-new-life.html
I hate to think that anybody actually falls for these things.
Glad you ran this. Wish my aunt heard it 12 years ago. She sent about $100,000 to a Canadian Lottery scam at about $1200 a pop for a couple of years. In her mid-80s at the time, she still worked as a professional actress and seemed amazingly sharp, living alone in Greenwich Village, NYC. Her acting ability masked a multiple personality disorder and it took 5 eviction notices for her to break down and call me for help (I live in Georgia). She had called me a few times to tell me she was broke and when I tried to find out exactly how bad things were, she would shift personalities (I did not know this at the time) and tell me she was expecting a large sum of money, giving me to understand someone had bequeathed her money. I sent her $1200 and drove to NYC to figure out what was going on. When I entered her apartment, it was filled with stacks of unopened magazines (she had at least 50 subscriptions), letters from collection agencies, eviction notices and boxes of sweepstakes entry literature with notes written on them indicating when she entered. She had been writing checks on long-closed investment accounts and I found a Western Union receipt showing that she had sent the money I sent her to someone in Canada. I shut down her credit cards, and, with the help of relatives, plugged some of the holes in her hemorraghing finances. One day, one of the scammers called her apartment. One of my cousins answered. The caller pretended to be from the FBI (we checked. It got their interest but no results). I actually have $25,000 in Western Union receipts and a note from one personality to another instructing her other self which WU office to avoid, that being the one that refused to do the transaction. Otherwise, no help or recognition of her problem from the outside world and none of the money was ever recovered. She died last year.
I think the young, mentally ill, minorities and extremely sheltered or isolated people are prone to these as well for very different reasons. I once was approached in front of my apartment by a very pleasant scammer selling himself as a college kid raising funds to study abroad. I happily signed up for a few of the magazine subscriptions he was hawking and went into my apartment to take a nap. When I woke up, I had a nagging, sinking feeling in my stomach and decided to research the company the kid claimed to be working with. Turns out it had a reputation for working with convicts and human trafficking, being potentially violent and almost never getting the magazines delivered. I immediately alerted the police that they were in my area and cancelled the check I had written. I had to constantly look over my shoulder over the next few weeks [about as long as this group stays in any one city] because one of the hotels they probably were staying at has several rooms that have a clear view of my front door. I wasn't sure how long they had been watching me to see when I got home each day, but it was frightening.
