Police say people were sent letters from China containing two scratch-and-win tickets, with one claiming that up to $US160,000 had been won.
Detective Senior Sergeant Aaron Pascoe says people are then asked for deposits of money to claim their prize.
While some people recognised it as a scam, others didn't, and kept sending money on request.
"Then they pay all sorts of additional fees, and then they discover they're not eligible to win the prize, and then they've got to pay a fee to become elgigble, then they pay a fee to confirm their identity, and then they pay a fee to confirm that it's not from drug sales," Mr Pascoe says.
"As long a people keep paying, (the fraudsters) will keep coming up with a reason to give them more money".
Mr Pascoe says any prosecution is unlikely and the money that has been lost is not recoverable. He says some people sent up to $200,000 in fees.