A couple years ago, a friend of mine saw a notice about a writing competition with a small press. The notice was on a website she trusted, a very big-name author was on the judges panel, the small press had an extensive website and had published five books already. Not having anything against small presses and being impressed with the judge's panel, (let's call the person Pat) Pat decided to enter. Three months later, Pat received an email saying she'd won the grand prize -- a publishing contract. Pat immediately went to work, scouring the internet for any negative information on this company. There was none. Pat signed the contract for publication, "met" (virtually of course) the runner's up in the contest as well as the managing editor, editor and existing authors with the company. She was ecstatic at the idea of finally having her book in print and soon went to work editing.
Pat corresponded frequently with the managing editor and her direct editor. She was asked to set up marketing tours and to participate in things like the Hub Challenge -- writing 30 articles in 30 days (which seemed excessive, given that she had a full time job and editing on top of it. But Pat wanted to be a 'good author' and made every effort to do what was asked.) After about a year of editing, the publisher dropped all communication. Pat talked to the runner's up in the contest and found that they hadn't heard from the publisher either. So they started digging around, deeply, in the publisher's website, in the state attorney general's records of the business...even in the big-name author who judged the contest. What did they find?
They found the big name author had never been involved in the contest. They found the "publisher" didn't have an actual premisis--just a PO Box--and the business hadn't been formed until the month the contest winners were announced. They even found chat transcripts in the company chat room alerting them to the fact that the managing editor and the editor never existed. They were just two of several personas played by two self-published authors, pretending to be a publishing company.
Did they intend to publish Pat and the other winner's books? Pat believes so, but one of the woman developed health issues that prevented them from following through. (They intended to 'self-publish' the winner's books, charging $20 a copy and pocketing 75% of that., while the writer's got 12%.) Was any of it illegal? Absolutely, but hard to prove to a standard of law. Did the "company" ever respond to Pat's allegations? No, nor did they sign a release from her contract. It cost Pat about $800 to get out of it.
At that point, after a year of marketing, Pat had tons of people asking when her book was coming out. She felt pretty stupid, having been taken in by a scam like this. She decided the easiest thing to do would be to self-publish, so she could tell people "You can get my book here" instead of explaining the whole sordid tale over and over.
It's been about six months since this all happened. Her lawyer warned her not to tell the story with full names, etc, even now. Her book is out and while self-publishing hasn't turned out to be the simple answer she was looking for, she's relieved to have it all over and would like other writers to know things like this can happen -- even to smart, careful, diligent people. So keep yourselves safe. There are some real creeps out there.