Mar 7, 2012

Scholarship Scams Part 2: Offers That Are Too Good To Be True

With tuition bills skyrocketing and college expenses going through the roof, it’s tempting to look for easy ways to make money through scholarships appearing almost too good to be true.

The Federal Trade Commission cautions students and their families to be smart consumers when evaluating scholarship offers and avoid organizations promising, “The scholarship is guaranteed or your money back” or “We’ll do all the work.” And be wary of lines like, “The scholarship will cost some money” or “I just need your credit card or bank account number to hold this scholarship.”

Here are some additional tips to help you separate the real offers from the scammers:

  • Application Fees. Never sign-on for a scholarship that charges an application fee. Additional fees to avoid include tax, postage, or “refundable” deposits.

  • Exclusivity. Organizations offering legitimate scholarships are seldom secret societies. No one should suggest that they alone have access to insider information about a particular scholarship or the best way to win it.

  • Exceptional Endorsement Claims. If a scholarship claims to be sponsored by the Better Business Bureau or a specific college or university, investigate. And don’t fall for scholarship scams trying to look like federal agencies to gain your trust. The government doesn’t operate or support independent scholarship services.

  • Guarantees. Even if an award could be “guaranteed,” money back conditions are usually attached making it impossible to get the refund. Again, you shouldn’t be asked to invest in a scholarship before competing for it.

  • Phone Notification.  Legitimate scholarships normally notify winners by mail. If you get a random phone call telling you that you have “won” a scholarship, be careful. Ask for a name and number. Next, visit the scholarship’s official website and contact the sponsors. Ask them to verify the name and phone number of the person who called. If the caller was legitimate, call them back.

  • Requests for Personal Financial Information. If scammers get your name, date-of-birth, and/or credit card, bank account or social security number, it’s easy to commit identity theft or steal your money. If anyone asks for personal financial information, run don’t walk away.

  • Unclaimed Dollars. Many scholarship search scams market the availability of unclaimed dollars. This just doesn’t happen.

  • Universal Eligibility. Scholarship sponsors usually seek candidates who best match specific criteria. Some sponsors are looking for high achievers. Others are looking for minorities, excellent athletes, or outstanding volunteers. Not many are given to students for just breathing. Scholarships claiming universal eligibility may be hoping you’ll turn over valuable information in the application process.

  • Unrealistic Success Rates. If a scholarship claims unusually high success rates, be wary. Despite what folks may tell you, everyone can’t be a winner.

  • Unsolicited Opportunities. Scholarship sponsors will not normally contact you unless you contacted them first. And avoid websites or services that promise to apply on your behalf. Only you have that privilege.
If the offer sounds too good to be true, take the time to investigate by contacting the FTC, the Better Business Bureau or local consumer watch groups such as the Fairfax County Consumer Protection Commission and the Montgomery County Office of Consumer Affairs. Link
This is the second in a two-part series on scholarship scams.

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