Scholarship Scam-Alert


-- by Kay Peterson, Ph.D.

Guess what? You're a "finalist" for a scholarship. And you never even applied! Too good to be true? Probably so.

The sad truth is that there are scammers out there—posing as scholarship providers or scholarship matching services—who take your money and leave you with nothing. The good news is, you can protect yourself from scholarship scams by following these tips.

Know Your Scams

Scams come in many flavors, but there are a few typical moves you should be aware of :

  • The phony scholarship: You receive a notice about a scholarship that promises you cash. All you need to do is pay the registration fee. So why not apply? Because there is no award. Or there is one small award used to lure you in.
  • The phony scholarship matching service: Pay a fee, and they'll do all the work. They'll find information that you can't get anywhere else! Not only that, they will guarantee that you'll win. The outcome? You never hear from them again or (even more frustrating) you receive a list of inappropriate or defunct awards. And forget your money-back guarantee: The company is long gone.
  • The phony educational loan: a low-interest loan in exchange for an up-front fee. You pay the fee, but never receive the loan.
  • The phony free financial-aid seminar: a thinly disguised sales pitch for a bogus scholarship search or insurance offer.

Scam Warning Signs:

  • The fee. Your best rule of thumb: Financial aid should never cost you. Never invest anything beyond the cost of a postage stamp in your search for financial aid.
  • The money-back guarantee—especially if the company tries to guarantee that you will win an award.
  • Credit card verification. If they ask for a checking account or credit card number—for verification or to confirm eligibility—stop listening. Scammers use this ploy to get your financial information and then drain your account or run up charges on your credit card.

What's Legit:

What's Not:

A legitimate scholarship provider sends information about awards only after you request it.

A scammer offers you an award for which you did not apply.

A legitimate scholarship organization makes its contact information available, including a telephone number and address.

A scammer refuses to release the company's telephone number, and provides only a P.O. Box where you can mail your check.

A legitimate scholarship matching company never guarantees that the student will win an award, and they never promise to "do all the work" for the student.

A scammer promises to do all the work for the students—filling out the application, contacting the scholarship provider, securing the award. A scammer guarantees you will win an award.

A legitimate scholarship matching company knows that financial aid information is FREE and readily available in financial aid offices, libraries and on the Internet.

A scammer will tell you that you can't get the information they supply anywhere else.

A legitimate scholarship application requires only information that is relevant to the award.

A scammer requires personal financial information—such as credit card numbers or checking account numbers—to verify or hold the scholarship.

A legitimate educational loan company deducts fees from your disbursement checks; they don't collect the money up front.

A scammer charges an up-front fee for a loan.

And remember: Don't be fooled by an "official sounding" name. Just because a company uses words like "National," "Federal," "Foundation" or "Administration" in its title doesn't mean it is a legit operation.

What to Do If You Suspect a Scam

  1. Document all your dealings with any company that you suspect of fraud. Include details about the offer, your response and the dates of your communications.
  2. Take notes during any telephone conversations with these organizations. Record the date and time of the conversation, the name of the person with whom you spoke and a detailed account of your conversation.
  3. Report them! Any of the following organizations can help:

National Fraud Information Center (NFIC)

Call their toll-free hotline at 1-800-876-7060, submit a complaint online at or write:

National Fraud Information Center
c/o National Consumers League
1701 K Street, NW
Suite 1200
Washington, DC 20006

Federal Trade Commission (FTC)

To report suspected fraud, call 1-877-FTC-HELP (1-877-382-4357), submit a complaint online at or write

Federal Trade Commission
600 Pennsylvania Ave, NW
Washington, DC 20580

State Attorney General's Office

File your complaint with the Bureau of Consumer Protection in your state.

Better Business Bureau (BBB)

Report business fraud, ask for information about a company or request the BBB's publications about scholarship scams: BBB Warning: Scholarship Search Services (July/August 1994) and Tips for Consumers from your Better Business Bureau (Scholarships, March 1996). Call 1-703-276-0100, contact online at or write:

Council of Better Business Bureaus
4200 Wilson Blvd., Suite 800
Arlington, VA 22203-1838

US Postal Inspection Service (USPIS)

For complaints involving mail fraud, call the Postal Crime Hotline at 1-800-654-8896, submit a complaint online at or write:

Inspection Service Operations Support Group
Attention: Mail Fraud
222 S. Riverside Plaza, Suite 1250
Chicago, IL 60606

To learn more about financial aid and scholarship scams, check out:

Visit The Winner's Circle Scholarship Handbook for more expert advice.

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