You won a prize you never entered: how lottery and sweepstakes scams work
A call, letter, or message says you have won a lottery or sweepstakes — you just need to pay a fee, tax, or "customs charge" first. That single request is the whole scam. Real prizes are free; here is how the con works and the one rule that ends it.
It arrives as good news: a call, a letter, an email, or a text telling you you’ve won — a lottery, a sweepstakes, a big cash prize, maybe from a name you recognize. There’s just one small step before the money is yours. You need to pay a fee. And that single sentence is the entire scam, no matter how convincing everything around it looks.
These scams are patient and they’re costly. The USPIS warns that prize-fee scams can drag on “for weeks, months, or even years,” with victims “out hundreds or thousands of dollars with nothing to show for it.” But unlike most cons, this one has a single, unmissable tell that never changes.
The one fact that ends every version
Real prizes are free. The FTC puts it as plainly as it can: “If you have to pay to get your prize, it’s a scam. Real prizes are free.” The USPIS rule is just as short — “Never pay to win.”
Everything else in the scam is set dressing. The “tax”, the “processing fee”, the “shipping and handling”, the “insurance”, the “customs duty” — they’re different masks on the same demand: send money to receive money. With a genuine win, that never happens. So you don’t have to evaluate how official the letter looks or how friendly the caller sounds. The instant there’s a fee to collect, you already have your answer.
How the con is built
The structure is consistent under the surface:
- The hook. You “won” — often a lottery or contest you never entered. As the FTC notes, a lottery requires you to buy a ticket to take part, so a win you didn’t enter is your first red flag.
- The fee. To release the prize, you must pay. The USPIS is explicit that “a contest you pay to enter is considered an illegal sweepstakes” — legitimate ones never require payment.
- The untraceable payment. You’re steered toward gift cards, wire transfer, a payment app, or crypto. The FTC says it directly: if “someone tells you to pay with gift cards? It’s a scam.” These channels are chosen precisely because the money can’t be traced or recovered.
- The escalation. Pay once and it rarely ends — a new “final fee” appears, then another, each one leaning on the money you’ve already sunk in.
Some versions add a fake “government” stamp to explain the fees. Ignore it: as the FTC notes, the federal government doesn’t run sweepstakes and no federal agency will call demanding money to release a prize. A “government fee” on winnings is a contradiction in terms — much like the government imposters who use the same authority costume for other scams.
Watch for the fake check
One variation deserves its own warning, because it makes the victim feel safe. The scammer sends a check to “cover the fees” and asks you to deposit it and wire part of it back. Your bank may release the funds in a few days — but the check is counterfeit, and once it bounces you owe the bank everything you withdrew. It’s the fake-check overpayment scam wearing a prize story. A real prize never arrives as “here’s a check, now send some of it back”.
How to spot it
The tells are in the box, but the engine is constant: an unexpected win + a fee to collect it + an untraceable way to pay. Change the prize, change the brand name, change the channel — it’s the same machine. The move is Never Pay to Get Paid: money should only flow toward you. And if a caller is rushing you, that pressure is the tell, not the prize — apply The Pause on Money.
If you’ve already paid
Act quickly and skip the embarrassment — these scams thrive on silence. Stop all further payments immediately, including any “one last fee” to finally release the winnings. Contact your bank or the gift-card/wire company right away to try to stop or reverse the transfer, and gather your records. Report it to the U.S. Postal Inspection Service at 1-877-876-2455 if it came by mail, the FTC at reportfraud.ftc.gov, and the FBI’s IC3 at ic3.gov. Be wary of anyone who later promises to recover your money for a fee — that’s a recovery scam, a second hit on the same victim. For more, see our defense moves and the 60-second quiz.
- You're told you won a lottery, sweepstakes, or prize — but you have to pay a fee, "taxes", shipping, or "customs charges" first to collect it.
- You won a lottery or contest you never entered, or one based in another country.
- You're asked to pay by gift card, wire transfer, a payment app, or cryptocurrency, and pushed to keep it secret or act fast.
- Real prizes are free. If you must pay anything — a fee, tax, shipping, or "customs" — to collect a prize, it is a scam, every time.
- You can't win a lottery or sweepstakes you never entered. Ignore any notice that you won something you didn't sign up for.
- No legitimate sweepstakes asks for payment by gift card, wire, a payment app, or crypto — those are the scammer's untraceable channels.
- The government does not call about prizes and does not run sweepstakes. A "government fee" to release winnings is always fake.
This is the scam I most want older relatives to hear about, because it’s patient in a way the others aren’t. It rarely takes everything at once — it takes a little at a time, one ‘final fee’ after another, and each new payment makes the last one feel too costly to walk away from. That’s the cruelty of it: the sunk cost is the hook. The clean exit is to never take the first step, because there’s only ever one true fact in the whole interaction — real prizes are free. Once you hold onto that, the rest of the story can be as elaborate as it likes and it changes nothing.
Sources
Frequently asked
They say I have to pay taxes or a processing fee before they can release my winnings. Isn't that how taxes work?
No — and this is the heart of the scam. With a real prize, any taxes are handled between you and the tax authority after you receive it; you are never asked to pay money to a company in order to unlock a prize. The FTC is blunt: "If you have to pay to get your prize, it's a scam. Real prizes are free." The USPIS says the same — "Never pay to win." Whether they call it a tax, a processing fee, shipping, insurance, or customs duty, the request to pay first is the entire con. There is no prize behind it.
I got a notice that I won a lottery, but I don't remember entering. Could it still be real?
Treat it as a scam. A lottery requires you to buy a ticket to take part, so if you didn't enter, you can't have won. The FTC's guidance is to ignore any notice that you won a lottery you didn't enter. Be especially wary of any lottery or sweepstakes based in another country — the USPIS notes that a foreign lottery conducted through the mail is actually illegal. The unexpected "win" is bait designed to get you emotionally invested before the fees start.
They sent me a check to "cover the fees" — so I'm not even out of pocket, right?
That check is part of the trap. In a common version, the scammer sends a check, tells you to deposit it and wire back part of it for "fees" or "taxes". Your bank may make the funds available within days, but the check is fake — and when it bounces, you owe the bank the entire amount you withdrew and wired away. This is the [fake-check overpayment](/fake-check-overpayment-job-scam) move bolted onto a prize story. Never deposit a check from a prize you have to pay into, and never wire money back from it.