Consumers who were tricked into paying a fee to collect a nonexistent multimillion-dollar sweepstakes prize will soon receive refund checks from the Federal Trade Commission.
“Your identification as recipient for reported cash award entitlements totaling over $2,500,000.00 has been confirmed! We are so pleased at having the honor of informing you of this wonderful news” read the mailers received by hundreds of thousands of consumers. Some mailers included official-looking seals and fake government agency names like the “Office of the President Official Notification.”
But consumers who contacted the defendants behind the mailers were told to send in a $20 “processing fee” by a given deadline in order to collect their prize. Those who sent in the money received information about entering a sweepstakes – not the $2.5 million.
The agency filed a complaint against National Awards Service Advisory and numerous other defendants. It reached a settlement under which the defendants are banned from the prize promotion business as well as making misrepresentations about any product or service. They are also prohibited from selling customers’ personal information and were ordered to pay various monetary judgments.
More than $183,000 was returned to 503 consumers. The amount varied depending on the total of each consumer’s loss, the agency said.
To read the FTC’s complaint and consent agreement with the defendants, click here.
Why it matters: In a press release about the payout, the FTC said the action was part of its “ongoing crackdown” on “last dollar scams” – those that prey on financially strapped consumers. Companies that run a sweepstakes should remember to clearly and conspicuously disclose both a free means of entry (including no charges for taxes, shipping or handling, or “processing” as the defendants did here) and the chances of winning, among other requirements.