Fraudulent Global Sweepstakes Repays $25 Million to Consumers

  • The FTC will disburse $25 million to consumers across the world following its joint settlement with the Missouri AG to resolve allegations that a network of companies and individuals (collectively “Next-Gen”) operated a fraudulent global sweepstakes program in violation of the FTC Act and Missouri Merchandising Practices Act.
  • According to a 2018 complaint, Next-Gen caused tens of millions of personalized fraudulent sweepstakes and prize mailers to be distributed around the world, scamming consumers out of more than $110 million. According to the FTC, the scam included three types of mailers: the first falsely represented to consumers that they won a substantial cash award in return for payment of a mandatory acquisition fee; the second informed consumers that they could win a substantial cash prize in exchange for answering a simple arithmetic question, when no such case prize existed; and the third promised consumers a cash prize in return for payment of a small fee, but instead enrolled consumers in a sweepstakes newsletter subscription.
  • Under the terms of the stipulated order, Next-Gen is banned from marketing or operating prize programs, but it may conduct a free raffle, drawing, or similar prize giveaway so long as consumers sign up in person. In addition, Next-Gen is subject to annual compliance reporting, and must pay $114.8 million in equitable monetary relief, part of which will be distributed to consumers around the world.  Specifically, the FTC will distribute 221,687 checks totaling $19,180,753 to consumers in the United States and Canada, 3,516 MasterCard debit cards totaling $631,322 to consumers in the United Kingdom, and 19,542 letters to consumers in over 50 additional countries, explaining how they can claim their portion of $4,696,242 in payments through Paypal.