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FTC Charges Fake Prize Scheme Operators With Fraud

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The Federal Trade Commission has charged the operators of a fake prize scheme with mailing phony prize notifications that tricked people into thinking they had won $1 million or more if they paid a $25 fee to collect the prize. Those who paid received nothing.

“These defendants relied on a shady international mail network to deceive consumers with offers of guaranteed cash prizes,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But whether the offer is made by phone, email, or regular mail, the same warning applies: If you must pay to collect a guaranteed cash prize, the only guarantee is that prize promoters win and consumers lose.”

According to the FTC, the defendants targeted hundreds of thousands of mostly elderly consumers with their mass mailing campaign. As alleged in the FTC’s complaint, the defendants mailed the prize notifications from fictitious companies stating the recipient’s name and noting, “ . . . this is NOT a preliminary or qualification letter of cash prize status; YOU HAVE WON A CASH PRIZE!” Many of the notices had official-looking logos, stamps, or seals and instructed consumers to fill out a form and return it to a post office box in the Netherlands, along with a $25 check, money order or credit card information to charge the $25.

According to the FTC, consumers’ personal information was used for additional fake prize mailings and also sold to other schemes, causing many consumers to be inundated with more deceptive cash prize notifications and other offers. Many consumers paid multiple fees amounting to substantial sums of money in response to repeated mailings promising prizes.

The defendants are Millenium Direct Incorporated, also doing business as MDI Lists; David Raff; Ian Gamberg; and Terry Somenzi, also d/b/a Paulson Independent Distributors, International Procurement Center, Phelps Ingram Distributors, and Keller Sloan & Associates.

The Commission vote authorizing the staff to file the complaint was 3-0. It was filed in the U.S. District Court for the Central District of California.

The FTC’s action is part of an international initiative against mass-mail fraud. Mass-mail fraud has been identified as a major financial threat by the International Mass-Marketing Fraud Working Group (IMMFWG), a network of civil and criminal law enforcement agencies from several countries, including Australia, Belgium, Canada, Europol, the Netherlands, Nigeria, Norway, Spain, the United Kingdom and the United States. The IMMFWG is co-chaired by the FTC and the Department of Justice. Other recent actions against mass-mail fraud have involved law enforcement agencies from Belgium, Canada, the Netherlands and the United Kingdom.

This article by the FTC was distributed by the Personal Finance Syndication Network.

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