Whenever you receive a letter telling you that you have won a “fabulous” prize, beware. The prize you win may not be worth the effort to collect it. The prizes often are cheap imitations of the real thing. These deceptively described prizes sometimes are used as an inducement to attract customers to sales meetings for land or vacation timesharing (the use of a vacation home for a limited, prearranged time) or other merchandise. Promoters who use these cheap imitations call them “switchers.”
A recent poll by Opinion Research Corporation showed that more than half of all American adults entered sweepstakes within the past year. Most of the contests were run by reputable marketers and non-profit organizations to promote their products and services. Some lucky winners received millions of dollars or valuable prizes. But many sweepstakes are scams, and an alarming number of people lose money to them. Every day, consumers across the United States lose thousands of dollars to unscrupulous prize promoters.
The Federal Trade Commission (FTC) receives more than 10,000 complaints a year from consumers about gifts, sweepstakes and prize promotions. Many of the consumers received telephone calls or postcards telling them that they’d won a big prize — only to find out that to claim it, they had to buy something or pay as much as $10,000 in fees or other charges.
According to the FTC, prizes in legitimate sweepstakes are awarded solely by chance, and contestants do not have to pay a fee or buy anything to enter or boost their chances of winning. Often the “fabulous prizes” touted in these contests aren’t worth collecting. A “diamond pendant” might be the size of a pinhead. A “luxury vacation for two” might be an overnight in a seedy motel. An “all terrain vehicle” might be nothing more than a toy car. Yet scam artists often use the promise of these and other “valuable” prizes to entice consumers to buy overpriced products or services, to contribute to bogus charities, or to attend sales pitches for land or vacation timeshares. People who fall for their ploys may end up paying far more than their “prizes” are worth — if they receive them at all.
The next time you get a computerized “personal” letter telling you that you have won a great prize, keep these points in mind:
- Do not be deceived by letters that look official or urgent. Some contest promoters use names that resemble official organizations (such as a state lottery or a charity organization) or an envelope that looks as if it contains an important telegram.
- Read the letter carefully. In some cases, the letter may tell you the cash value of each prize or that you must attend a sales seminar as part of the contest. This information often appears in fine print at the end of the letter.
- Remember, the chances of winning a truly valuable prize are slim.
- If you attend a sales meeting, do not sign a contract or give the salesperson a deposit right away. Ask for a few days to consider your decision. During that time, check out the company.
- Do not let the salesperson make you feel guilty for not buying what is being sold. It is only a sales tactic.
- If you sign an agreement for a vacation timeshare, many states law allow you five days to change your mind and cancel the agreement. There is no uniform rule and in many states there is no grace period.
- Before signing make sure you read the contract carefully. If the salesperson makes claims that are not in the contract, remember it is the contract that counts.
- Do not buy a product just for the prize.
If you want to curb delivery of unsolicited mail to your home from national companies, put your request in writing and mail it to:
Mail Preference Service
Direct Marketing Association
P.O. Box 9008
Farmingdale New York, NY 11735
If you are a victim of a sweepstakes scam, contact Consumer Fraud Online to discuss your options.