Sweepstakes Scams. The Federal Trade Commission (FTC) has settled with several operators of a sweepstakes scam. The scam bilked consumers out of millions of dollars. Included in the settlement agreement, the scammers are permanently banned from operating sweepstakes of any kind or making claims about any prizes they have won or may win.
In 2015, the FTC filed its first complaint regarding the matter. The government alleged that the defendants absconded with over $28 million from consumers. The scam not only impacted consumers in the United States, but those in other countries, such as Canada, Germany, Japan, Australia, France, and the UK.
The settlement will prevent the defendants from hurting more consumers with false promises and bogus prize claims. However, because of the 2021 U.S. Supreme Court decision in AMG Capital Management, the FTC’s ability to refund affected consumers has been eliminated. Therefore, it is imperative that Congress stand up and defend the rights of the consumer by restoring the FTC’s ability to compel scammers to refund monies taken.
The FTC, in its complaint, charged the defendants with sweepstakes scams, whereby the scammers sent personalized letters telling consumers that they had won significant cash prizes. Consumers were told to collect their winnings, they needed to mail in $20-$30, within 10-days. If they failed to do so, they would forfeit their guaranteed winnings. This was all a lie; there were no winnings except to the scammers.
The settlement agreement bans the defendants from involvement in any type of prize promotion, including a sweepstakes or contest, which tells consumers that they have won something or could be eligible to win a prize. Further, they are prohibited from any deceptive enterprise or venture, and they are not allowed to utilize any consumer information acquired during the scam.
The FTC unanimously voted to approve the stipulated final orders. The orders were approved and entered on June 21, 2024. Stipulated final orders have the force of law when approved and signed by a federal court judge, as were these.
The FTC’s job is to promote competition and protect consumers by preventing fraudulent, deceptive, and unfair business practices and to provide helpful resources. What to do if you are scammed? To file a complaint against someone engaging in fraudulent, deceptive, or unfair trade practices, visit the FTC’s complaint portal or call (877) FTC-HELP (1-877-382-4357).
In my blog posts, I have designated July as FTC Month. I will post blogs on a variety of consumer topics from the FTC website.
FRANCINE D. WARD, ESQ.
INTELLECTUAL PROPERTY & ESTATE PLANNING LAWYER
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