How would you feel if you heard a knock at your front door — and when you opened it you saw a stranger holding a giant check and telling you you’d just won $1 million? It would probably feel pretty exhilarating at first, but you’d be in the right if your skepticism started kicking in soon after. Despite this, thousands of people each year enter and win contests and sweepstakes.
Contests and sweepstakes are popular because they give you the opportunity to win valuable prizes with little effort. Some of those prizes can be life-changing, and others can put a little bit of fun money in your pocket — but either way, it’s enjoyable when you win. And scam artists know just how much people want to win. That’s why they’ve created various scams related to contests. How can you protect yourself and your finances from this fraud when you’re entering sweepstakes? We’ve got some tips that can help you stay safe.
What’s the Difference Between a Contest and a Sweepstakes?
Contests and sweepstakes are both forms of competition where many people sign up to win a few prizes or maybe even just one grand prize. There’s a very small chance that any one of those individuals will be the winner.
In a contest, entering involves some form of participation. For example, you might win a trip to see your favorite singer by sending in a video of yourself singing their song or win a prize at the county fair by baking the best cake. Contests usually have judges who decide which contestant, or group of contestants, did the best job.
Sweepstakes are games of chance. You enter by signing up. Some sweepstakes are loosely tied to making certain purchases. For example, a store may automatically enter every customer who spends more than $50 by a certain date into its latest sweepstakes. However, sweepstakes are also open to people who don’t make a purchase. That’s why the fine print of many sweepstakes’ rules and regulations says “no purchase necessary.”
Tips for Avoiding Scam Contests and Sweepstakes
If you have to pay to enter a contest or sweepstakes, it becomes a raffle or a lottery. Raffles and lotteries are illegal in many states and are often strictly regulated where legal. For sweepstakes to qualify as sweepstakes, people who don’t make a purchase must be allowed to enter. As a rule, you should start questioning things if you’re being asked to pay to enter a contest or sweepstakes.
Here’s a good rule of thumb. Companies often don’t reach out to individuals to get them to sign up for a contest or sweepstakes. Some companies may email notifications about an upcoming contest to customers, but that’s about as far as it usually goes. If someone is calling or emailing you about entering a contest or sweepstakes, there’s a very good chance it’s a scam. When the opportunity is legitimate, it’s usually up to you to sign up without any help or prompting from the business.
This may sound simple, but it’s true. If you haven’t signed up for a contest, there’s usually a slim chance that you could legitimately be a winner. Whether by email or letter, legitimate contests and sweepstakes always have some method of confirming entry.
Businesses don’t run sweepstakes and contests out of the goodness of their hearts. Sweepstakes and contests are marketing efforts. The businesses running the contests (and every business supplying the prizes) are always keen to plaster their names and logos all over the promotional materials. You should be able to easily identify who’s running any legitimate contests. Be cautious of any supposed sweepstakes that don’t clearly state the businesses or organizations running them.
How to Spot a Fake Contest or Sweepstakes
Contests and sweepstakes fall under certain federal guidelines, and legitimate businesses take steps to remain compliant. If you enter a contest or sweepstakes online, there should be a privacy policy. This explains exactly how the owners of the promotion will use your information. Sometimes, the privacy policy says that you agree to receive marketing materials from all of the businesses involved after entering the contest.
The easiest way to protect yourself is to read the rules of any promotion before signing up. Some contests, though legitimate, may have rules that you disagree with. Especially if you’re submitting creative material, make sure you understand exactly what’ll happen to any information you submit for the contest. How will you know if you win? How will you receive your prize if you win? If there are no rules to read, that’s a major red flag.
Most contests and sweepstakes require you to submit basic contact information to sign up. A contest should never ask for sensitive information like your Social Security number or bank account number to enter.
What’s the Risk of Entering?
Some fake sweepstakes sell information, such as email addresses and phone numbers, to third parties. But, receiving a bunch of spam is the least of your worries if you fall prey to a sweepstakes scam. Scam artists use fake contests to commit identity theft. If you supply your demographic and contact information to a person or entity that’s not legitimately running a contest, they could use the information you provided to open lines of credit in your name.
There’s a common scam related to identity theft in which a caller will say you’ve won money from Publishers Clearing House. Publishers Clearing House is such a well-known sweepstakes provider that there’s a chance you might’ve actually signed up with the organization. The caller will instruct you to supply your personal information or even pay a fee to claim your prize. If you pay a fee, you lose money, and you don’t win any prize. Some of these scams are long-term operations in which the scammer continues to call you back with excuse after excuse explaining why they need just a little more money before getting your prize to you.
These days, contests and sweepstakes have the potential to provide a big reward, but they can also come at high risk. Remember that it doesn’t cost to enter a legitimate contest or sweepstakes. No legitimate business needs your banking information to enter a sweepstakes. If it sounds too good to be true, it probably is.
