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If they actually tell all the designers that, say, it's a contest, and only the winner's design will be chosen and paid for, that's okay.
If they are asking for a complete drawing as a "sample piece" and don't intend to pay anybody except the one they like, yeah, that stinks. Artists hopefully know enough to do quick sketches (little actual work) if they are asked for a sample. And to request at least 50% upfront, for complete designs.
There are web sites telling how bad this gets.
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