Sweepstakes, lottery scam losses up, especially for those 55 and older

Sweepstakes and lottery scams resulted in higher financial losses during the COVID-19 pandemic compared to the previous three years, particularly for older people, according to new research from Better Business Bureau® (BBB).

BBB warns consumers never to pay money to claim a prize. If anyone asks for money before delivering a prize, it is likely a scam.

The research is an update of BBB’s 2018 in-depth investigative study, Sweepstakes, Lottery and Prize Scams: A Better Business Bureau Study of How “Winners” Lose Millions Through an Evolving Fraud. Since the study’s publication, there has been a 16% decrease in complaints to the Federal Trade Commission (FTC), the FBI’s Internet Crime Complaint Center (IC3) and the Canadian Anti-Fraud Centre (CAFC).

However, financial losses reported to all three agencies rose dramatically in 2020 with the COVID-19 pandemic, with FTC logging an increase of more than 35% in reported dollar losses.

According to Steve Baker, BBB International Investigations Specialist, “This updated research highlights how these scams work and the importance of educating older adults and other people who may be susceptible to these scams. Because these scammers are so good at what they do, anyone could be a victim.”

Older adults are the primary target for sweepstakes scams

People over the age of 55 continue to be the primary target of sweepstakes, lottery, and prize scams, representing 72% of fraud reports for this type of scam received by BBB Scam Tracker during the last three years. Of the older consumers who were targeted, 91% reported that they lost money. Adults over 55 lost an average of $978 while those 18-54 lost an average of $279, according to Scam Tracker reports.

The confinement and isolation many older people experienced during COVID-19 may have helped fuel the increase in losses. Other factors that may contribute to some older people’s particular vulnerability include mental decline and relative financial stability, as reported in BBB’s 2018 study.