How to Spot Lottery and Prize Scams

Lottery and prize scams are among the oldest cons in existence, and they still work because the promise of a windfall is hard to ignore. The letters, emails, and texts look convincing — sometimes with official-looking logos, seals, and legal language. But the core of every one of these scams is the same: you never entered, and you never won.

Here is how they work. You receive a notification — by letter, email, text message, or even a phone call — saying you have won a large prize. It might claim to be from a sweepstakes company, a foreign lottery, a television show, or even a well-known brand like Publishers Clearing House (though be aware that scammers impersonate PCH too). The prize might be cash, a car, a vacation, or a check.

The critical part comes next: before you can claim your prize, you must send money. The reason given changes — taxes, processing fees, customs clearance, insurance, legal fees, or "release fees." The amount is often deliberately small enough to feel manageable — $200, $500, $1,000. Once you pay, the scammer either disappears or comes back with another required fee, repeating the cycle until you stop paying.

Several red flags mark every legitimate prize scam: you must pay fees before receiving your prize; you are told to keep your winnings secret; payment is requested by wire transfer, gift cards, cryptocurrency, or a payment app (all difficult or impossible to reverse); you never entered the lottery they claim you won; the contact information or website does not match the official organization.

Here is the law: in the United States, it is illegal for any legitimate sweepstakes or prize promotion to require you to pay fees or make a purchase to collect your winnings. No exceptions. If winning requires payment, it is a scam.

Legitimate prizes work like this: if you genuinely win a large prize, the organization mails you a check or arranges direct deposit. You will receive an IRS Form 1099 to report the prize income on your tax return. Taxes are paid when you file — not upfront to a stranger.

What to do if you receive one of these notices: do not pay anything and do not provide your bank or credit card information. If the contact came by email, block the sender. If by mail, write "REFUSED — RETURN TO SENDER" on the envelope and put it back in the mail. Report the scam to the FTC at reportfraud.ftc.gov. If you already paid money, contact your bank immediately and report to your local police.