Omaze: Too good to be true? A critical look at the suspect company

Omaze has become a popular platform promoting unique raffles, offering extravagant prizes like a six-bedroom waterfront home in Cornwall valued at £4.5 million, and even a Porsche 911 Carrera 4 Coupe. The allure of these prizes, coupled with the promise of charitable contributions, raises questions about the platform's operation and impact.

Since the house is expected to bring in between £5,000 and £7,000 per month in rental income, the winner may be able to secure a substantial passive income. Early participants also have the chance to win a Porsche 911 Carrera 4 Coupe, valued at nearly £110,000.

Is Omaze a scam?

Omaze’s business model and methods of operation have drawn criticism and claims that it is a scam. Despite its claims to be a platform for charitable giving, the group has been charged with deceiving the public about its track record, conducting unauthorized lotteries, and keeping a sizable portion of its earnings.

Business Model and Controversies

While Omaze has raised significant funds for charities such as UNICEF and Save the Children, scrutiny has arisen regarding the proportion of proceeds allocated to these causes. It is important for participants to consider the business model which involves costs covering prizes, advertising, and operational expenses.

Editor's Note: Detailed financial breakdowns are not always readily available, and interested parties should research the latest reports for updated figures.

As an illustration, only 15% of the proceeds from tickets for a chance to win a dream vacation to the Maldives go to the International Medical Corps. Costs like the prize, advertising, and fees associated with payment processing are typically covered to a degree of 65 to 75 per cent. As a result, the charity will only get a small portion of the money raised overall.

Omaze Board and Directors

Oakwood Corporate Secretary Limited is a UK limited company, appointed as the Secretary on 18 June 2019. The company has four active officers, including James Allan Oakes, who is a Director with the title of CIO, and Matthew Pohlson and Nina Sen, who are Directors with titles of CEO and CFO, respectively.

All officers were appointed on the same date, 18 June 2019. More info here: https://find-and-update.company-information.service.gov.uk/company/12056935/officers

Regulatory Compliance and Settlements

Omaze has faced legal scrutiny, including an investigation by the California attorney general in 2019 over potential unauthorized lottery operations. A settlement was reached in 2020, with Omaze agreeing to pay fines and adhere to charitable fundraising and raffle laws.

The California attorney general looked into the organization in 2019 to see if its fundraising efforts amounted to an illegal lottery or “raffle” under California law. Omaze settled the claims in January 2020, forking over $30,000 in late fees and penalties for “operating without being properly registered,” as well as $90,000 to cover the cost of the investigation. According to the settlement, Omaze has not “admitted wrongdoing. “.

Additionally, Omaze has been charged with violating the guidelines for holding no-cost prize drawings. The organization has been accused of failing to clearly and prominently advertise its free entry options although it does offer them. Because the free entry route was not made clear, the UK’s Advertising Standards Agency upheld complaints that the promotion of a house raffle was deceptive. “.

Omaze fake winners

Omaze still runs and collaborates with nonprofits despite these accusations. The organization’s for-profit business model and methods of operation, however, are criticized for possibly misleading the public and taking money away from charitable causes. Therefore, those thinking about making a donation to Omaze or taking part in its prize draws ought to thoroughly research the company and its history before deciding to support its initiatives.

Omaze troubled winners

Uttam Parmar also chose to sell his prize. He won a four-bedroom Cornish mansion worth an impressive £3m after entering the competition with just £25. He and his wife Raki, 53, decided to sell because they couldn't afford the upkeep.

Marilyn Pratt sold the £2.9m house she won in Fulham for £100,000 less just eight months later. She and her husband David chose to stay in their two-bedroom house in south-east London where they have lived for 40 years.

Settlement Agreement between the California Attorney General’s Registry of Charitable Trusts and Omaze

Accounding to the Settlement Agreement between the California Attorney General’s Registry of Charitable Trusts and Omaze, Inc. concerns Omaze’s compliance with California’s charitable fundraising and raffle laws. The agreement includes requirements such as offering free entries on the same terms as paid entries and prominently disclosing that no payment is required to participate in a campaign.

Omaze will need to comply with all applicable California rules and regulations related to fundraising for charitable purposes and will be exempt from the raffle registration and reporting requirements of Penal Code section 320.5 while it remains in full compliance with the requirements of Penal Code section 320.5, subdivision (m). The settlement also stipulates that Omaze will deposit 100% of each contribution it receives in an account that is solely in the name of Charities Aid Foundation America within five working days.

The terms of the agreement apply to Omaze, its successors, assignees, and any entity owned or operated by Omaze, and to every registration issued by the California Attorney General. If Omaze violates the agreement, the Registrar may assess penalties and take additional action authorized by law. Omaze will need to reimburse the Attorney General’s Office in the amount of $90,000 in attorney fees and costs incurred in the investigation of this matter pursuant to Government Code section 12598.

Industry Challenges and Workforce Reductions

Recent developments in the Los Angeles tech industry have seen significant workforce reductions at notable companies, including Happy Money Inc. and Omaze Inc. Happy Money, a personal loan facilitator, announced the layoff of 152 remote employees effective January 30. Similarly, Omaze is set to lay off 103 employees from its Los Angeles office as of February 7. These changes were disclosed in a Worker Adjustment and Retraining Notification Act (WARN) filing.

While the filing did not specify the reasons for Omaze's layoffs, a spokesperson from Happy Money attributed their decision to the "current economic challenges." The spokesperson elaborated that the reduction is a strategic move to navigate the turbulent macroeconomic climate. Despite the layoffs, Happy Money reaffirms its commitment to transforming the lending industry with a focus on well-being and support for people's aspirations.

Consumer Perspectives and Winner Testimonies

Amidst the controversies, Omaze continues to operate and collaborate with nonprofits. Testimonies from winners can shed light on the genuine opportunities provided by the platform, though it remains essential for potential donors to conduct thorough research.

As with any charitable giving or participation in prize draws, it is advisable for individuals to fully understand the organization they are supporting. Transparency and due diligence are key in ensuring that one's contributions are having the desired impact.