FTC Cracks Down on 'Massive' Advance-Fee Sweepstakes Scam

FTC Cracks Down on 'Massive' Sweepstakes ScamMillions of consumers have received the letters that to many are obvious scams, but enough vulnerable recipients pay the requested fee to make the scheme profitable.
At the request of the Federal Trade Commission, a federal court has halted a “massive sweepstakes scam” that has taken in more than $11 million from consumers throughout the United States and dozens of other countries, including Canada, the United Kingdom, France, and Japan.
The FTC wants to halt the allegedly illegal mailings that have continued for seven years, and the agency wants to return money to victims.
The sweepstakes scheme has sent more than 3.7 million letters during the past two years, including nearly 800,000 letters to people in 156 countries in the first half of 2013. They have collected more than $11 million from consumers since 2009.  The vast majority of the victims of this scam appear to be over 65.
According to the FTC’s complaint, Liam O. Moran, a resident of Ventura, California, and his companies, mass-mail personalized letters to consumers informing them that they have won a large cash prize, typically more than $2 million. Bold, large-type states: “Over TWO MILLION DOLLARS in sweepstakes has been reserved for you.”
Consumers are told that they can collect the prize by sending in a small fee of about $20 to $30. The letters often indicate that recipients are “guaranteed” to receive the prize money if they pay the fee, and they create a sense of urgency by stating that it is a limited-time offer.
The operators of the scame provide small-print disclaimers, but the FTC alleges that these language doesn’t reduce the illegality of the operation.
In “dense, confusing language,” often on the back of the letters, there are statements in direct conflict with the bold claims of major winnings.
“A very careful reader might learn that they, in fact, have not won, and that the defendants do not sponsor sweepstakes, but instead claim only to provide consumers with a list of available sweepstakes,” the FTC said in a news release.
Consumers frequently fail to see or understand this language and send money to the defendants, the agency said.
The FTC alleges that this language does not appear designed to correct deceptive statements, but exists mainly as an attempt to provide a defense to law enforcement action. Consumers get nothing of value in exchange for their payment, the FTC said..
The defendants have sent more than 3.7 million letters during the past two years, including nearly 800,000 letters to people in 156 countries in the first half of 2013. They have collected more than $11 million from consumers since 2009.  The vast majority of the victims of this scam appear to be over 65.
The court order temporarily stops the illegal conduct, freezes the operation’s assets, and appoints a receiver over the corporate defendants while the FTC moves forward with the case.
According to the FTC, Moran’s co-defendants are Applied Marketing Sciences LLC; Standard Registration Corporation, also doing business as Consolidated Research Authority and CRA; and Worldwide Information Systems Incorporated, also doing business as Specific Monitoring Service, SMS, Specific Reporting Service, SRS, Universal Information Services, UIS, Compendium Sampler Services, and CSS.

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