Police investigate scratch-off lottery ticket scam in northern Michigan, state

Dec. 27—TRAVERSE CITY — Michigan State Police troopers are investigating a criminal "cell" that uses stolen credit card numbers to purchase lottery scratch tickets at convenience stores and gas stations.

Retailers in four counties filed complaints about the alleged scammers to law enforcement since mid-December, including reports to the state police post in Higgins Lake.

One such case occurred in the Grayling area. Other incidents ranged from Crawford and Roscommon counties in the north, to Lapeer and Montcalm counties to the south.

"We believe they're using rental cars from Ohio, then hitting 'mom and pop' type locations in rural areas," said state police Lt. Derrick Carroll. "Smaller stores often don't have the same level of sophistication when it comes to fraud prevention — that's why they get targeted."

The suspects attempt to purchase hundreds or thousands of dollars' worth of scratch tickets by entering credit card numbers without actually possessing a physical card, according a deputy at the Roscommon County Sheriff's Office. One such attempt may have yielded up to $800 worth of scratch tickets, state police officials added.

"We are conducting a coordinated investigation with several [law enforcement] agencies," Carroll said. "It's believed that this criminal cell includes more than one group of individuals."

Photos of the suspects, captured by a store's video cameras, have been posted on the Roscommon County Sheriff's Facebook page. Citizens who can identify the alleged perpetrators are asked to call the state police at 1-855-MICH-TIP. No arrests have been made so far.

Scratch tickets are popular in Michigan, accounting for nearly half of all lottery sales — that's up from a third of all sales a decade ago.

In the last five years, total lottery sales have jumped 47 percent in Michigan, rising nearly $1.57 billion, including an 80-percent increase in the amount spent on instant tickets.

With all game categories factored in, the Michigan Lottery Commission reported selling $4.9 billion in tickets during 2022. That's the equivalent of $500 for every resident in the state.

Today, about 10,500 retailers in Michigan sell lottery scratch tickets, said Jake Harris, head of player relations at Michigan Lottery headquarters in Lansing. At any given time, 40 to 50 different scratch tickets games are on sale in the state. A typical smaller retailer might offer 30 varieties.

"The shelf life for a scratch ticket is typically a couple of years before they expire," Harris said. "The odds of winning depend on the prize structure for each game."

Top prizes for these instant games range from $100 to $6 million, depending on the game. The actual scratch tickets cost from $1 to $50; games with a higher jackpot typically cost more. Each year, the Michigan Lottery introduces several dozen new instant games featuring fanciful names like "Tinsel Town" and "Cashing Through the Snow." Tickets are sold online, in stores and through in-store vending machines.

Preserving the integrity of the lottery system is a high priority for his agency, said Harris. "While fraudulent activity does happen from time to time, we teach our retailers to be vigilant. They should always get payment from the customer before handing over the ticket."

The type of payment retailers accept for lottery tickets varies by location, he added. Many happily accept credit and debit card payments, while others still require cash only.

"If the customer is paying by credit or debit card, always make sure they have a physical card at the point of purchase — don't accept numbers only," Harris said.

The Michigan Lottery operates a full-time security office and works closely with law enforcement agencies whenever fraudulent or suspicious activity is reported, he added.

"We also depend on timely input from our retailers," Harris said.

Whenever retailers suspect fraud related to lottery tickets, they should immediately notify local law enforcement and then call the Michigan Lottery Retailer Services team at 1-800-592-4040, he said.

Despite recent advances in credit card security, the process of obtaining stolen credit card numbers became much easier with the advent of the so-called "dark web" — a shadowy section of the internet where illegal activity abounds.

Cyber criminals steal — and sell — millions of credit card numbers each year, making it one of the most common types of fraud in the United States, according to the Federal Trade Commission. Those stolen card numbers sell for as little as a few dollars each.

FBI officials at the Internet Crime Complaint Center urged consumers to make sure their credit card numbers aren't being used for fraudulent lottery ticket purchases — or any other illegal purpose. For example, they advise checking online account information frequently and flagging unfamiliar charges, then calling the credit card provider to find out more. Prompt action can prevent further illegal use, they said. To learn more, visit www.ic3.gov.

Since its inception in 1972, the Michigan Lottery donated more than $27 billion to the state's School Aid Fund. For every $1 spent on lottery games, 63 cents goes to prizes, 25 cents goes to the School Aid Fund, 9 cents goes to retailer and vendor commissions, and 3 cents is used for lottery operations, according to the agency's official website.