How it works
You are told you have won a sweepstakes or foreign lottery. In order to collect your winnings, you are informed that you must first pay taxes or customs duties – typically via wire transfer. You send the money, but you never receive your winnings…because there was actually no sweepstakes or lottery to begin with.
What you should know
- Legitimate sweepstakes will never ask you to pay taxes or fees to receive your prize. If taxes are owed, you would simply report your winnings to the IRS when you file your annual tax returns.
- It is illegal to play a foreign lottery, so if you are informed that you won one, you know it’s a scam. Besides, how could you win a foreign lottery if you never bought a ticket?
- Sometimes the scammers will send a check for a few thousand dollars to cover the alleged taxes or fees. They’ll instruct you to deposit the check and then wire the money to them once the check has cleared. Don’t be fooled. The check is a fake. Despite popular belief, just because a check “clears” your bank, it does not mean the check is legitimate. It can take weeks to discover that a check is counterfeit. By that time, the scammers have disappeared with the cash, and you are liable to the bank for the money you wired.