A "1 Out of 5 Prizes" scheme usually takes the form of a telemarketer calling to inform you that you have been selected to win one or more prizes. The telemarketer will list the prizes for you. Sometimes the prize is a "free" annual subscription to a certain magazine. Other times there is a choice of potential prizes, such as a car, a truck, a fishing boat, a bracelet, or a watch. In any case, the telemarketer will tell you in order to receive this prize you must contribute some amount of money.

The reason for contributing the money will vary:

  • It is necessary to buy a product in order to qualify for the sweepstakes.
  • The money is contributed to a charitable cause, and as a reward for your donation you will be given a gift.
  • There are processing fees in order to ship the gift to you.

It then follows that you have to make payment arrangements by check, money order, credit card number, or even your bank account number.

So, What’s the Catch?

The catch is that you probably paid a fairly large sum of money for something that is not worth the value of your "contribution". Compare the "discount" price given for the magazine subscription to how much it would be to just order a normal subscription through the magazine itself. You will most likely find that with all the added costs, you probably paid more than a subscription directly through the magazine.

As for the list of potential prizes you could win, the fact is that you will never be able to win the highest valued prizes. Lower priced items, such as a bracelet or watch, will be cheap knockoffs that are not nearly as nice as described by the telemarketer, and are not nearly worth the amount you paid for them. In some cases you will not even receive the gift you were promised. This can be particularly devastating to those consumers who have been tricked into giving out their credit card or bank account numbers to these telemarketers, as now the scammer has complete access to spend money using your credit line.

What Should I Do if I Am the Victim of One of These Prize Scams?

If you have been contacted by a sweepstakes scam, you can report it to local or state consumer protection agencies. You can also file a complaint with the Federal Trade Commission (FTC). The FTC oversees deceptive advertising and can bring an action against the defrauders.

Additionally, if you have been contacted through the mail about a scam, you should also file a complaint with the U.S. Postal Inspection Service, which will investigate any potential mail fraud. Finally, filing a complaint with the Better Business Bureau will help alert other consumers.

Should I Contact an Attorney?

If you feel you have been tricked into paying for something due to false advertising or an outright con, you may want to contact a consumer lawyer. Your attorney can let you know what your options are help you decide the best course of action. You may even be entitled to compensation and punitive damages in a lawsuit against the person or company who took your money.