The Federal Trade Commission recently targeted a "massive sweepstakes scam" involving defendants who made more than $11 million sending direct mail notices that recipients were sweepstakes winners.

Liam O. Moran and his companies – Applied Marketing Sciences, Standard Registration Corporation, and Worldwide Information Systems Incorporated – allegedly sent personalized letters to more than 3.7 million consumers worldwide (including Canada, France, Japan, the United Kingdom, and the United States) proclaiming “Over TWO MILLION DOLLARS in sweepstakes has been reserved for you!” Those over the age of 65 constituted the vast majority of victims.

The letters appeared “professional and official,” the agency said, “often including suggestive seals, approval stamps, bar codes, pin numbers, and routing numbers meant to convey that the letters are coming from, or specifically authorized by, a governmental entity or sweepstakes provider.”

By sending in a small fee—typically $20 to $30—the consumer was guaranteed to receive the prize money. The defendants amped up the mailing with a sense of urgency, the FTC added, with statements that the offer is “extremely time-sensitive” or an “immediate response is required.”

But “dense, confusing language” located on the back of the mailings directly contradicted the “bold claims of major winnings,” the agency said. Readers were told that they had not in fact won a prize but would be paying for a list of available sweepstakes. “Given the location, and content of this language, it does not adequately inform consumers that they have not won a substantial cash prize.”

“None of the consumers who have paid defendants’ fee have received the substantial cash prize promised in defendants’ mailing,” the agency claimed. “In fact, most consumers have received nothing at all from defendants, not even the report of available sweepstakes and contests defendants purportedly compile for consumers.” Consumers who paid the fee received additional letters requesting more fees. 

A California federal judge halted the defendants’ operations, ordered an asset freeze, and appointed a receiver while the agency continues to pursue a permanent end to the defendants’ efforts and a possible financial recovery.

To read the complaint in FTC v. Applied Marketing Sciences, click here.

Why it matters: Even with the agency’s focus on more technologically advanced methods of consumer deception – native advertising, for example, or the intersection of privacy rights and the Internet of Things—the FTC still keeps an eye out for traditional marketing scams. The agency noted that Moran has “been in the business” since 1995 and has already been subject to two cease and desist orders from the U.S. Postal Inspection Service. Still, he has managed to run his latest operation for seven years.