|-- by Kay Peterson,
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
- 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
- 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.
A legitimate scholarship provider sends information about
awards only after you request it.
A scammer offers you an award for which you did not
A legitimate scholarship organization makes its contact
information available, including a telephone number and
A scammer refuses to release the company's telephone
number, and provides only a P.O. Box where you can mail your
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
A scammer charges an up-front fee for a
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
What to Do If You Suspect a Scam
- 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.
- 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
- 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 http://www.fraud.org/ or write:
National Fraud Information Center
c/o National Consumers
1701 K Street, NW
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 http://www.ftc.gov/ or write
Federal Trade Commission
600 Pennsylvania Ave,
Washington, DC 20580
State Attorney General's Office
File your complaint with the Bureau of Consumer Protection in
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 http://www.bbb.org/ or
Council of Better Business Bureaus
4200 Wilson Blvd., Suite
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 www.usps.gov/postalinspectors/fraud/welcome.htm
Inspection Service Operations Support Group
222 S. Riverside Plaza, Suite 1250
Chicago, IL 60606
To learn more about financial aid and scholarship scams, check
Winner's Circle Scholarship Handbook for more expert advice.