They send you out the letters which at first glance look official, saying you are a winner in a lottery. They will also enclose a check or a cashier's check to help you pay for taxes on the lottery. Everything looks so correct and you start to get excited because you won the lottery! But this is probably a scam.How the process works
They send you the letter with the check. They also congratulate you on winning a lottery. These lotteries usually never exist, and if they are real lottery you probably never entered them. They tell you in the letter that all you have to do is cash the check and send them the money back by Western Union to pay for your taxes on your winnings. Once they receive the money for the taxes they will send you another check with the balance of the winnings. These checks are usually under $5000 that they send you to cash so that the banks or Western Union don't get suspicious. They give you a number to call for further instructions and questions. The check that they usually send has a name of a real bank, but if you call the bank, they will tell you that the money isn't in there to cash the check.
How the scammers make money, and How you lose money
If you take the check and cash it, you may get the cash for it. Once the back finds out that the check is no good, or that it's a fake check, they will make you responsible for the money that they gave you on the check. This can take several days for the bank to realize that the check is a fake. By this time you could have already sent the money to the scam artists and they have their cash, but you are on the hook to pay for the bad check that you had cashed. So you are out the money, but they got theirs.
How to know it's a scam
The checks that they send with the lottery letter look so real. It's easy to see why the bank could be fooled. But if you look at the check that they send you, there are usually some errors on it. Look at the routing number on the check, it could be the same number as the check number. On real checks the routing numbers is first and a 9 digit number. After the routing number is the account number, this can vary in numbers, and then the next set of numbers is the check number. This check number should match the upper right hand corner of the check. If it doesn't, it's probably a fake check. Now looking at the letter, if you read over it carefully there are usually some typos. There is usually a sense of urgency to respond before you are no longer eligible for the winnings.
The envelope is a plain envelope with no return address, and it's all usually done on cheap paper. There is nothing really Official about it.
How to protect yourself
There should be several questions to ask before cashing a check you didn't expect.
With winning the lottery you have to pay the taxes first on the winnings. The taxes are withheld before you get the check. Legitimate lotteries will send the taxes to the government then give you the proceeds. They won't send you a check to cash and send back. If they can send the tax check to you, they could send it to the government. The next thing is sending the cash by Western Union this is a red flag. Never send cash by Western Union to people that you don't know.
If the letter doesn't come by registered mail be wary. If you did win this much money in the lottery wouldn't you think that they would send it registered mail?
Also one last thing, if the money isn't collected in the lottery, the money would go back to the state or country that ran the lottery. This would make the money theirs, and profit to them, and less that would have to pay out. Do you really think they would want you to collect it if you didn't know you won?
The letters and check can appear to be legitimate. But they're usually not. Before you cash and send money, or fall for this scam, do some research. Call the back that the check is written on ask if there is money in the account or if they have an account with this number. Do your homework. It could save you a lot of money and heartache.