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Money September 2016

Dollar Sense

You’re Not Too Smart to Fall for a Lottery Scam

By Teresa Ambord

Victims aren’t generally chosen at random. Their names somehow end up on a lead list, which one thief can purchase from another. And then the calls begin. But in many cases, there does seem to be one thing in common among many victims, and that’s that they’re lonely, live alone, and may crave human contact.

It’s easy when you see reports of a scam like a fake lottery to wonder how anybody could fall for it. But don’t laugh too quickly. Some scammers are inept and obvious, but many are clever, convincing people of all education levels, IQs and incomes that they’ve won gigantic monetary prizes. Victims aren’t generally chosen at random. Their names somehow end up on a lead list, which one thief can purchase from another. And then the calls begin. But in many cases, there does seem to be one thing in common among many victims, and that’s that they’re lonely, live alone, and may crave human contact.

A recent episode of “American Greed” focused on how Jamaican lottery scammers are adept at becoming “friends” with the victims. They make notes about the victim’s family, then call often and ask “How’s your daughter? Does she still have the flu? Did your son get that job? When will your grandson, Mike, graduate from vet school?”

According to the Federal Trade Commission, many lottery scammers introduce themselves as attorneys, customs officials, or lottery representatives trying to reach the true winners. Of course, the winner is whoever answers the phone. The prize, says the scammer, is layered. That is, it may include a cashier’s check, a large chunk of cash, and very often, a luxury car. Perhaps that adds to the credibility of the scam.

 

One Smart, But Lonely Woman

The “American Greed” episode tells the tale of a hard-working, savvy farm widow in North Dakota, Edna Shmeets. Out of the blue, she was contacted by a man calling himself Newton Bennett, a nice American-sounding name, right? And he sounded American, though in reality he was calling from his mansion in his homeland of Jamaica, which was financed with money stolen from people like Shmeets.

Nelson explained to her that she’d won $19 million and a new car, in a lottery that was sponsored by the federal government. The only thing was, the lottery company had prepaid her taxes for her, so she would need to pay $3,500 to reimburse them before she could receive the winnings. He took the time on the phone to develop trust and form a friendship. He also warned, “don’t tell anybody, not even your family, it will complicate the process.” She sent the $3,500, which proved to the scammer that she believed the story, and that she had some money. That led to more requests, more delays, more fees and taxes.

Ultimately, she cashed in her life insurance and CDs to pay the never-ending fees. It wasn’t until she went to her banker to try to get a loan on her last remaining asset (farm tractors) that a bank official sensed a problem and contacted her children. When her children intervened, the cash bleed stopped, but by then, Shmeets had given the scammers over $400,000.

  • Talk to Your Elderly Relatives: Officials interviewed in the “American Greed” episode urge adult children to be mindful of their elderly parents, watching for signs of financial scams. Explain how lottery scams work in a way that they themselves can watch for and avoid the scams. Keep in mind, the best victims seem to be lonely older people, especially those who live alone.

The scammers position themselves as a substitute for family, and even tell victims to refer to them as family. Jamaican officials have said that even after scams are uncovered, some of the victims say they would continue to pay the callers, in order to have the human contact with the callers.

Jamaican officials interviewed by “American Greed” explained that many Jamaican scammers look at the money they steal as “reparations” due them from “wealthy Americans.” A well-known rap song popularized the notion that Americans owe poor Jamaicans a living, even when it impoverishes the victim. Those who promote this idea claim to take only from wealthy individuals. But American officials uncovered scams where the victims had no income but Social Security, and ended up turning over every penny of that money to scammers.

  • What to Say to Your Parents: Talking to your parents about money matters is never easy. But the Federal Trade Commission reminds us that the victims of Jamaican scams who have come forward showed tremendous courage to reveal their experiences and help put scammers in prison.

The FTC says to ask your parents (or yourself) these questions:

  • Do you remember entering the contest you supposedly won?
  • Does the caller ask you to wire money? That’s an almost certain sign of a scam, says the FTC.
  • Is there an urgency about paying the fees quickly? If so, just say no. The urgency is their need to not let a hot prospect get away.

If you get a call which you think might be fraud of any kind, you can do one of two things:

  1. Go online to FTC.gov, and type in “complaint.”
  2. Or call toll-free 1-877-382-4357. Even if you can’t remember much of the details, reporting the call helps.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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