Lottery-check scams get more seductive, ingenious

Sunday, August 27, 2006 posted 05:29 AM EDT

Those lousy lottery-check scams are mutating again and ensnaring more unsuspecting consumers.

But first, folks, you just shouldn’t fall for these goofy scams. No honest lottery in the world gives out free money.

That said, the scams are increasing. And they offer sneaky new twists to create a false sense of security. More scams are using counterfeit checks drawn on legitimate bank accounts of real businesses.

Reader Mary Kay Culp of Lenexa alerted me to one bogus check she and her husband got from the National Lottery Co. of New York. The lottery said the Culps could use the check, in the amount of $4,750.25, to pay a 12 percent surcharge required to secure their winnings.

That was the first clue the check was fraudulent. Honest lotteries do not require surcharges or other upfront fees.

But these scam artists veil their ruse by making their victims believe they are doing them a favor. “By law you are not required to pay for your winning on any lottery with your personal money (sic) that’s why we enclosed a check to cover your surcharges,” the lottery letter said.

The Culps just needed to deposit the check in their bank, then wire a payment to cover the surcharge. What could be easier? In 72 hours they’d receive their $250,000 in winnings

The Culps didn’t fall for it — though they did pause over the scammers’ ingenuity.

“There is this tiny little voice inside you that says, ‘What if this is true?’ But there is a louder voice that says, ‘Of course this is not true,’ ” joked Culp.

What made the check even more convincing is that, unlike more amateurish efforts, it didn’t come from the lottery.

Instead, it purported to come from DDB Worldwide Communications Group Inc., a real company that, in fact, handles marketing for the New York Lottery. And it was drawn on The Northern Trust Co. of Chicago. By all appearances, it is a legitimate check. In fact, it is a good counterfeit, authorities said.

A DDB spokeswoman said her company is not associated with the National Lottery Co. Indeed, authorities said, the National Lottery Co. doesn’t even exist.

“It’s really sneaky because if you called the bank they would confirm the real company had an account there and they might even confirm there is enough in the account to cover the check,” said Susan Grant, head of the National Consumers League, which monitors lottery-check frauds.

Authorities say the scammers work out of Ontario, Canada, and call consumers to verify their winnings using cell phones so they can’t be traced to any one location.

Allan Weiss, a Toronto lawyer, said businesses whose checks have been stolen also have been defrauded. He has gone to court to force telephone providers to shut down phone numbers used by the scams.

“It’s almost like a drug deal,” said Barry Elliott, coordinator of Phone Busters, an anti-fraud center operated by the Royal Canadian Mounted Police and the Ontario Provincial Police Department.

He said the scammers steal real company checks from the mail. They then use sophisticated techniques to wash ink off the checks and write in consumer names, which they buy on the Internet.

Duped consumers think they are getting legitimate checks. Many presume if their bank accepts the checks, they must be good and they are cleared to withdraw money from their account.

But that’s a mistake. Even if a bank deposits a check in a consumer’s account, that doesn’t mean the check has cleared.

It actually takes weeks for a check to clear. That’s because the consumer’s bank won’t know whether the check is good until it is presented for payment to the bank on which it is drawn.

By then, a consumer has wired the money to the scammers. Inevitably these checks bounce. The scammers get their money. But the victims get nothing. And legally they are liable to their bank for the bounced check.

Why are consumers still falling for this? “A lot of customers are not aware of the scam,” said Mark Miller, executive vice president of Premier Bank in Lenexa.

Like a growing number of banks, Premier has put up signs warning customers of the scam and its consequences. The warnings can short-circuit the fraud before it happens.

“Every bank large and small should do the same,” Grant said.

How to protect yourself from check scams How to protect yourself

•If you unexpectedly get a check, it’s probably a scam.

•If you cash the check, you will be liable for the full amount if it bounces.

•If the check bounces, your account may be frozen.

•If you must deposit the check, wait until you know it has cleared to cash it.

•If you have questions, ask your teller or a bank official.

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