Phony sweepstakes checks flooding mail

January 28, 2009 7:27:57 PM PST
When economic times are hard two things happen. People look for ways to save money and unfortunately, some look for ways to steal money.

Previously 7 On Your Side aired a story about a woman who received a sweepstakes check in the mail that turned out to be a fake. Now, a dozen more viewers say they have also received checks that looked legit.

7 on Your Side is warning you that it is a scam.

San Jose resident Mary Mead was surprised at what she found inside her mailbox.

"A million dollars... I won third prize," she thought.

She had gotten a letter saying she won the Publisher's Clearinghouse Sweepstakes. She also got a check for $5,300, it said, to cover some fees.

"At first glance it's a legitimate check," she said.

But, something about all this did not seem right.

"I mulled it over for like a week... I said 'I think Mike Finney should know about this,'" she recalled.

Sonya Brown of Oakland thought she had won $248,000. She too got a similar notice in the mail saying she had won the Atlantic Lottery. It came with a check for $4,900. She was supposed to deposit it and wire some of it back to cover taxes.

It seemed possible. She had been entering lots of sweepstakes at the mall.

"And, the check looks real," she remembered.

Brown was still skeptical so she called the contact number and a woman answered.

"She said, 'Oh yes, this is legitimate. Just go ahead and cash it and do it just like the letter says,'" Brown recalled. "I'm saying I just want to make sure this is legitimate and she called me an idiot."

Sonya contacted the bank listed on the check. JP Morgan confirmed that the account was real and belonged to the company in Colorado.

But, it still seemed fishy so she called 7 On Your Side.

Just as we suspected, the letters Mary and Sonya got were both fake.

Publisher's Clearinghouse never sends winnings in the mail and Atlantic Lottery only operates in Canada. The IRS never collects taxes through sweepstakes and the check Sonya got was counterfeit and not really issued by that Colorado company.

The Postal Service has investigated thousands of fake checks. But now there is also a new state law to crack down on phony sweepstakes.

"The goal here is to make sure the law keeps pace with the scammers who have new ideas on how to part us with our money on a seemingly almost-daily basis," says State Senator Joe Simitian.

Simitian's new legislation makes it a crime to mislead consumers about contests, even if no money changes hands. But Simitian says it will not stop all the bad guys.

"There will always be folks who have no regard for the law whatsoever and they're going to come from offshore and overseas. And in that case it's buyer beware," says Simitian.

The best way to stop fraud is to not fall for it. If you get a check from someone you do not know and you are told to wire some of it back, it is a scam. The check will be no good and the money you send will come out of your account.

"How many people might rush to the bank with it?" wonders Mary.

"It's disheartening. I really do want the money. I really need the money," laments Brown.

Because of banking laws that require speedy check clearance, some victims do not realize the checks are fake until after they wire their own money away. By then they are stuck with the loss.

Click here to learn more about how these scams work.