Sweepstakes and ‘Free’ Prizes

It happens every day. Thousands of people are notified by mail that they have won a free prize. Usually, it’s a postcard that says your prize will be one of four or five “valuable” items — like a new car, a color television, or a $1,000 savings bond.

Typically, con artists whose sole purpose is to rip you off mail these notices. When you contact the company by phone to claim your prize, the scam artist will tell you that you are required to pay a “processing” or “insurance” fee and pressure you to give out your credit card number. Don’t do it! The con artist may make thousands of dollars in unauthorized charges to your account. If you refuse to give out your credit card number, beware of the con artist’s other scam—convincing you to cover the processing or insurance fee by sending a check for hundreds of dollars by overnight courier, or by wiring the fee to a person or business in Canada, Costa Rica, or another foreign location.

Either way, you can be certain that your prize will cost you more than it’s worth—or it may never arrive at all.

Business Tip: Advertising specialty products like pens, key tags, baseball caps, and ice scrapers, to name a few, has helped many companies gain recognition. However, illegal “boiler room” operations also use these products to ensnare owners and employees of small companies in a fraud scheme.

The scheme begins with a notification that you’ve won a big prize in a sweepstakes promotion. But there’s a catch—you are told that you must purchase a certain quantity of items with your company name and logo to avoid a “gift tax.” The purchase, which can amount to several thousand dollars, may result in inferior merchandise or nothing at all.