Sweepstakes and Lottery Scams: If You Have to Pay to Win, It's Fake

A call, a letter, or a message arrives with thrilling news: you have won a sweepstakes, a lottery, or a big prize. The catch is always the same. Before you can collect, you need to pay a fee, cover the taxes, or take care of shipping and insurance. Real prizes never work this way, but the excitement and the official-sounding names make the trap feel real.

These scams hit older adults especially hard, partly because the prizes are made to sound life-changing and partly because the scammers are patient and persistent. This guide explains how the scam works, shows a real example, and gives you simple rules to protect yourself and your family.

What it is

A sweepstakes or lottery scam tells you that you have won, then gets you to pay made-up fees or hand over bank details to “release” a prize that does not exist. Many use the names of real, well-known sweepstakes to seem legitimate, and some even reference government agencies to make the taxes sound official.

The defining feature is simple and never changes: you are asked to pay money in order to receive money. A real prize is given to you, not sold to you.

How it works

1. You are told you won a prize, often a contest you never entered.
2. To claim it, you must pay taxes, fees, customs, or insurance up front.
3. They ask for payment by gift card, wire transfer, or cryptocurrency, or for your bank account number to “deposit” the winnings.
4. After you pay, new fees appear, or the prize simply never comes. Some victims are kept paying for months on the promise that the prize is almost there.

A common variation uses a fake check. The scammer sends a real-looking check for part of the “winnings” and tells you to deposit it and wire back the taxes. The check bounces days later, after you have already sent your own money, leaving you owing the bank.

A real example

George, 80, gets a warm, congratulatory call telling him he has won $2.5 million and a new car from a famous sweepstakes. The agent is friendly and patient, and explains that the IRS requires the taxes to be paid before the prize can be delivered, and the fastest way is with gift cards. George buys several and reads off the numbers. Then there is a “customs fee,” then an “insurance fee,” each one described as the last step before his prize arrives.

The calls continue for weeks, always upbeat, always one more fee away from the big check. By the time his daughter realizes what is happening, George has sent thousands of dollars. There was never a prize, only a script designed to keep a hopeful person paying.

By the numbers

• Older adults are more than twice as likely as younger adults to report losing money to prize, sweepstakes, and lottery scams (FTC).
• For adults 80 and older, prize, sweepstakes, and lottery scams drove about $13 million in reported losses in a single quarter of 2024 (FTC).
• In 2025, the FTC sent more than $18 million in refunds to consumers misled by Publishers Clearing House (FTC).

Red flags to watch for

• You “won” a contest, lottery, or sweepstakes you never entered.
• You must pay a fee, taxes, or shipping before you can collect.
• Payment is requested by gift card, wire transfer, or cryptocurrency.
• You are told to keep the win secret or to act immediately.
• A check arrives and you are asked to deposit it and send some of it back.

How to protect yourself

1. Hold onto the one rule that defeats this scam: a real prize never asks you to pay to receive it.
2. Do not pay any fee, and never share your bank account, card, or Social Security number to claim winnings.
3. Do not trust a check that comes with a “win.” Fake checks can clear at first and then bounce.
4. Hang up or throw it away, and resist the urge to “just see what it is.”
5. Cut down on the contacts. Scammers buy lists of seniors who have entered sweepstakes or who appear on data-broker and people-search sites. Removing your information from those sites, which a privacy or data-removal service can do for you, reduces these calls and letters.
6. Tell your family if you start getting prize calls. People who have paid once are put on “sucker lists” and targeted again, so a second set of eyes helps.

If you’ve already responded

Contact your bank or card company right away. If you used gift cards, call the gift card company immediately with the numbers, since some value can sometimes be frozen. Report it to the FTC at ReportFraud.ftc.gov, and tell a trusted person, because scammers very often circle back to anyone who paid before.

In the news

• Older Americans lost $2.4 billion to scams in 2024, FTC says (ConsumerAffairs)
• FTC issues annual report on protecting older adults

Sources

• FTC: Lottery and Sweepstakes Scams
• FTC: Fake Prize, Sweepstakes, and Lottery Scams
• FBI IC3: Elder Fraud
• FTC: Report fraud