Mar 5, 2012

Scholarship Scams Part 1: Avoid High Pressure Marketing

Nearly everyone needs money for college. Even those who don’t, like the idea that hard work and academic achievement can be recognized through prestigious scholarship awards.

And sometimes it seems so simple. Fill out a form, write an essay, provide a social security number, and the money can be yours.

But stop. Before you give away important information like social security numbers or access to bank account information, check to see if you’re working with a reputable organization with honest intent.

According to the Federal Trade Commission (FTC), unscrupulous companies guarantee or promise scholarships, grants, or amazing financial aid awards. Many use high pressure sales pitches at seminars and some go so far as to contact students to tell them they’ve been selected as “finalists” for awards requiring up-front fees.

If you’ve been invited to attend a seminar on financial aid or scholarships, the FTC suggests that you follow these steps:

  • Take your time. Don’t be rushed into handing over fees at the seminar. Be wary of high-pressure sales requiring you to buy now or risk losing out on the opportunity. Solid scholarship programs don’t play these games.

  • Investigate. Take a close look at the organization by reviewing their website and researching funding sources or hidden agendas. Consider contacting the FTC or local consumer organizations if you still have questions.

  • Question. Don’t fall for success stories that seem too good to be true or testimonials of extraordinary success. The seminar organizers may have planted “shills” to give glowing accounts. Instead, ask for a list of at least three local families who have used the services in the last year and contact them for references.

  • Be cautious. Ask for a written description of the services, associated charges, and what the company’s refund policy is. Keep in mind that you may never recoup the money you pay to unscrupulous organizations regardless of stated refund policies.

Note that there are legitimate companies advertising access to lists of scholarships in exchange for an advance fee. Others might charge a fee to compare a student’s profile with a database of scholarship opportunities and provide a list of awards for which a student may qualify. But keep in mind there are numerous web-based scholarship search engines that will do this for free like FastWeb or Cappex.

If you chose to pay for this service, make sure that the company with which you are working can produce credentials and has a good record with the FTC, Better Business Bureau, and local consumer watch groups such as the Fairfax County Consumer Protection Commission or the Montgomery County Office of Consumer Affairs. And resist all efforts to pressure youLink to sign a contract before you’ve done your investigation.

This is the first of a two-part series on scholarship scams.

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