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January 16, 2007

Warning! Counterfeit Check "Lottery" Scam

Attorney General and Iowa Lottery warn consumers about scams that promise huge lottery prizes. “Don’t deposit a check and wire money to get a lottery or sweepstakes prize!”

Iowa Attorney General Tom Miller (Right) and Iowa Lottery CEO Dr. Ed Stanek(DES MOINES) Attorney General Tom Miller and Iowa Lottery CEO Dr. Ed Stanek issued a joint warning Tuesday about a wave of counterfeit-check lottery scams – mailings that have induced Iowans to wire off thousands of dollars in order to claim what is described as a large lottery or sweepstakes prize.

“The crooks get the money, and the victim gets nothing but a big loss and the bank coming back for its money,” Miller said. “Typical victims lose $2,900 or $3,900 or more, with the promised winnings never to be seen. And the crooks are almost certainly in Canada or Africa, impossible to trace and punish. Consumers have to be smart and reject this wave of lottery scams, and all forms of counterfeit check scams.”

Stanek said that the Iowa Lottery and the Attorney General’s Office have received scores of letters, calls and e-mails in recent months from Iowans, and that some of the scams now are using names of real lotteries and well-known logos such as that for the Powerball game.

Stanek said many Iowans have had ‘close calls’ – they were so curious about “prize-award” letters they received that they contacted authorities to ask if they were real. “We warned them about the scams and hopefully, they didn’t fall for them. The volume of inquiries we’re receiving tells us we need to educate Iowans about the dangers of these scams,” he said.

“Remember that the only lottery legally authorized to operate in Iowa is the Iowa Lottery,” Stanek said. “You have to buy a ticket or enter one of our promotions to win, and the Iowa Lottery will never charge you to claim a prize.”

Miller said his office last week heard from a northern Iowa woman who wired $3,500 for “processing fees and taxes” in order to collect a $175,000 lottery “prize,” and an eastern Iowa man who lost $2,900 in “taxes and administration fees” to collect a $50,000 “prize.” In both cases, the money was sent to so-called lottery “lottery award agencies” supposedly based in Canada. Canadian and U.S. officials very rarely can recover such funds and catch and punish the con-artists.

“This is a very nasty scam threatening thousands of people,” Miller said. “All signs indicate that hundreds of these letters are landing in Iowa now. People usually are skeptical, but their guard goes down when their bank provides the funds from the check, and when their hopes get high for an unexpected windfall. The checks are extremely good counterfeit versions of bank cashier’s checks or corporate checks, or even U.S. Postal money orders. They easily can fool even bank tellers.”

Banks are required by federal law to make funds “available” by the next business day for bank cashier’s checks and Postal money orders, and within five days for corporate checks, Miller said. Consumers may see funds in their account or even be told the funds are “available” – but that is not good enough. Until funds have been finally “collected” by the local bank from the issuing bank (which can take days or weeks), the consumer must not count on the checks being authentic.

The Attorney General’s Office and Lottery are developing consumer protection ads to warn about the scams and plan to release the ads later this winter. In addition, the Attorney General’s Office has issued Consumer Advisories about the scams and the Lottery has added a new “Player Security” page to its Web site to provide information about the scams and other security tips.

The Lottery also will provide warnings about the scams through its retailer and player newsletters.

Miller and Stanek gave these tips to avoid lottery and sweepstakes scams:

  • Don’t ever wire funds from a check you’ve received to pay “taxes or fees” for a promised lottery or sweepstakes prize. You’ll never see your money again. Reject ANY kind of scheme that sends you a check and asks you to wire money back to them.
  • To avoid all types of lottery schemes: Never believe a letter, phone call or Internet message from anyone who claims they can guarantee you a prize! Legitimate lotteries do not guarantee that you will win a prize and do not require people to join prize pools to play.
  • Never pay processing fees, insurance or commissions to claim a lottery prize. Legitimate lotteries do no require winners to pay anything up front to receive a prize.
  • Keep your Social Security, credit card and bank account numbers to yourself. Scam artists ask for them with the goal of accessing your accounts and stealing your money.

If you have been the victim of a counterfeit check scam:

Unfortunately, it is highly likely that the money is gone, with little hope of tracing or recovering it – usually to Canada, Africa, or Europe. (Wired money can be picked up almost anywhere in the world, no matter where it appears to be addressed.) Contact the Attorney General’s Office for advice and information on agencies that may be able to use your information or assist you. We also need your information to keep tabs on the frequency and forms of counterfeit check scams so we can work to “inoculate” consumers and help them avoid the scams.

Canadian law enforcement agencies and their “Phonebusters” project have had some success. The U.S. Secret Service is the U.S. agency for international white collar crime.

Contact information:

  • Attorney General’s Consumer Protection Division: 1305 East Walnut St., Des Moines, Iowa 50319. 515-281-5926, or 888-777-4590 (toll-free.) E-mail: or go to the "For Consumers" page on the  attorney general's website. The Consumer Protection Division will give you its best advice on how to proceed if you’ve lost money.
  • Contact your local police or sheriff to file a report if you’ve lost money. You need to document your loss – and you may need to explain that YOU didn’t intend to defraud your local bank. You likely will have to make repayment arrangements with your bank.
  • Iowa Lottery: 2323 Grand Avenue, Des Moines, Iowa 50312. 515-725-7900, or TTY Relay Iowa: 1-808-0735-2942. E-mail: . Contact the Lottery if you think there is any question of a lottery solicitation being related to the Iowa Lottery.
  • U.S. Secret Service: Federal Building, Suite 637, 210 Walnut St., Des Moines, Iowa 50309. 515-284-4565. The U.S. Secret Service recommends that victims call the office in Des Moines if they’ve lost money. If there are leads, the USSS will investigate them or forward the leads to the USSS office where the lead originated.
  • “Phonebusters.” If there is a clear Canadian connection to the scam, and if you’ve lost money, contact Phonebusters – the Canadian anti-fraud call center that is a cooperative effort of the Royal Canadian Mounted Police, Ontario Provincial Police, and the Federal Competition Bureau (equivalent to the U.S. FTC.) Call toll-free to 888-495-8501. The address is: Phonebusters, PO Box 686, North Bay, Ontario, P1B8J8 CANADA. E-mail:
  • Federal Trade Commission (FTC) – go to:, call: 1-877-FTC-HELP (1-877-382-4357), TTY 1-866-654-4261, or write to: Consumer Response Center, 600 Pennsylvania Ave. NW, Washington, DC 20580.  For FTC information on international lottery scams and counterfeit checks, click here.
  • The U.S. Postal Inspection Service. Call 1-877-876-2455 or go to the U.S. Postal Inspection website.


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