The Federal Trade Commission has one rule for every call, letter, text or social media message that says a prize has been won: a real sweepstakes prize is never paid for. In a consumer alert, the agency’s staff put it as “the moment someone tells you to pay to claim your prize, you know you’re dealing with a scam,” and the FTC says real prizes are free.
The test works whatever the story around it. It holds for a fake sweepstakes, a “charity drawing,” a foreign lottery and a “you won because you donated” call, and it costs nothing to apply.
How the prize call works
The FTC’s October consumer alert describes scammers who pose as well-known charities and sweepstakes. They may say the person won a charity-sponsored drawing because of a past donation, and they use real or similar-sounding charity names. The goal, the agency says, is to get the target to pay for a “prize.”
The FTC’s guide to fake prize, sweepstakes and lottery scams says the scam shows itself at the moment the caller asks for money or account information. Pay, and the money is gone and there is no prize. The agency lists the usual labels for the fee: “taxes,” “shipping and handling charges,” “processing fees” or “customs duties.”
Why caller ID and charity names prove nothing
The alert warns that caller ID can be faked, even when it shows the name or number of a government agency or a company. Scammers also buy search ads that lead to false information, so the first result for a charity or contest name is not proof the organization is real.
The FTC advises researching the charity or company before responding. That means searching its name with words such as “complaint,” “review” or “scam” and not relying on the first results. Its charity guidance adds that some scammers use names that closely resemble real charities, so the exact name is worth checking, and it notes that any offer to guarantee sweepstakes winnings in exchange for a donation is a scam.
Anyone who gets a prize call, particularly a retiree who has given to charities in the past and may seem a natural target for a “you won because you donated” story, faces the same decision: hang up and look the organization up independently, using a phone number or website found on the charity’s own paperwork or a trusted source, not the one the caller supplied. A real sweepstakes sponsor will still be there after the check.
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How the money leaves, and why it rarely comes back
The same guide warns against paying to improve the odds of winning. Real sweepstakes are free and decided by chance, the FTC says, and paying to enter or to boost the odds is illegal. A caller who says a payment will raise the chances is describing something that, by the agency’s account, does not exist.
According to the FTC, prize scammers ask for payment by wire transfer, payment apps such as Zelle or CashApp, cash, gift cards or cryptocurrency. The agency says these methods are hard to trace and hard to recover money from, which is why the request for one of them is itself a warning.
Another variation is the fake check. The scammer sends a check and asks for part of it back. The FTC explains that the bank may make the funds available at first, but once the check is found to be fake, the account holder must repay the money. The check looks like proof of a win and works as a trap.
Paying also has a cost beyond the lost money. The FTC’s alert says that anyone who pays will likely lose that money and then receive more sweepstakes calls, mail and spam. A payer is marked as someone who pays.
What a legitimate contest looks like
The FTC says real contests share a few features. Entry is free and based on chance. Promoters may sell entrants’ information to advertisers, which can lead to targeted ads, mail and calls, but that is separate from a demand for money.
When a promoter calls, the FTC says the law requires disclosure that entry is free, the prizes and their value, the odds of winning and how to redeem a prize. Sweepstakes mailings must state that nothing needs to be paid to take part and cannot call a person a winner unless a prize was actually won. An enclosed check has to say plainly that it is non-negotiable and has no cash value.
Skills contests are different, the agency notes, and may charge entry fees. The FTC cautions that such contests can involve paying repeatedly through increasingly difficult rounds, so the real chance of winning deserves scrutiny.
Where to report a prize call
The FTC takes reports at reportfraud.ftc.gov, which is free. Its guidance also points to the state attorney general and local consumer protection office, the U.S. Postal Inspection Service if the promotion arrived by mail, and IdentityTheft.gov if a scammer got personal information. For charity-related calls, the agency suggests reporting to the state charity regulator as well, with the organization’s name, the phone number and what the caller said.
Anyone who has already paid should act quickly. The FTC says that the sooner a victim acts, the better the chance of recovering money, and the guide refers readers to its advice on getting money back. Sharing the call with family and friends is also on the agency’s list.
What if the caller already has a name, a number or a bank detail?
The detail that gets missed is that a prize call is often step one. A caller who learns a bank, a card or a family member’s name can return later with a second, more convincing story, and a paid prize fee can be followed by a request for account access.
“Scam-Proof Your Accounts in a Weekend” gives ten moves in the order that protects the most money first, including “how to lock your bank logins with two-step login, alerts and a verbal password,” “a family code word for fake grandchild-in-trouble calls” and “how to freeze your credit at all three bureaus, free by federal law.” It closes with a first-hour plan if a scam gets through anyway.
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
