Scholarship Scams
Scholarship scams tend to have a particular set of characteristics. These characteristics can be used to identify possible scams. We list some of the warning signs below. If you have questions regarding scholarship scams, please contact:The National Fraud Information Center - 1 (800) 876-7060
Federal Trade Commission for the Consumer (FTC)
Better Business Bureau (BBB)
Scholarship Scams Information
Check out these warning signs from the FTC:
- The company guarantees a scholarship or your money back.
- The scholarship service promises to do all the work.
- There is a fee required for the listings the service provides.
- the scholarship company claims to have exclusive information.
- You become a finalist in a a contest you can't even remembering entering.
- There is a request for your credit card or checking account number.
The FTC states that thousands of families are taken advantage of in the scholarship scam game. Many of these fraudulent scholarship companies pose as legitimate foundations or scholarship search services. They advertise in campus newspapers and on the web; they pass out flyers and send out direct mail cards featuring toll free numbers. They promise "free money for college," when all they're doing is targeting vulnerable students and worried parents. Report any service you suspect is a scam. Call the Better Business Bureau or visit their web site: www.bbb.org
Where's my money? - Scholarship Scams: Tips for Consumers from your Better Business Bureau.
Planning/paying for school - Scholarship Scams: Beware of scholarship service scams.
FinAid! Scholarship Scams - Information on how to identify scholarship scams, how to distinguish between legitimate and fraudulent organizations, how to protect yourself from scams, and what to do if you are scammed.
Additional web sites - check out whether a scholarship service is legitimate:
www.fraud.org/welcome.htm
www.ftc.gov/ftc/consumer.htm
www.ftc.gov/os/ar97/bcpredress.htm
Find legitimate financial aid sources at your high school counseling office, college financial aid office or local public library before you pay someone for the same or similar scholarship opportunities.
Application fees: Beware of any scholarship which requests an application fee, even an innocuously low one like $10.00 Most legitimate scholarships do not require a fee.
Other fees: If you must pay money to get info about an award, apply or receive the award it might be a scam. Beware of 900 number telephone services. There are many legitimate scholarships search services that charge students a fee to compare the student's profile against a database of scholarships. it is however, very difficult to distinguish between legitimate services and scam imitators. Charging more than $50 to search a scholarship database is excessive, especially since you can search the FastWeb database for free.
Guaranteed winnings: No legitimate scholarship sponsor will guarantee that you will win the award. Also be wary of guarantees that you'll receive a minimum amount of financial aid. Disregard any news that you're a finalist in any contest that requires you to pay a fee for further consideration. Before you send money to apply for the scholarship, check it out.
Don't pay an advanced fee. Don't pay anyone who claims to be "holding" a scholarship for you or informs you the scholarship will cost some money. Free money shouldn't cost a thing.
Everybody is eligible: Scholarship sponsors do not hand out awards to students indiscriminately. You must meet specific scholarship criteria.
Unsolicited opportunities: Most scholarship sponsors will only contact you in response to your inquiry.
Typing and spelling errors: If the application materials contain typing and spelling errors or lack an overall professional appearance, it may be a scam.
No telephone number: Most legitimate scholarship programs include a telephone number for inquiries with their application materials. Be careful if the application materials do not include a telephone number and Directory Assistance does not have a listing for the organization.
Mail drop for return address: if the return address is a mail drop (e.g., a box number) or a residential address, it's probably a scam. Some scams may attempt to disguise a mail box as a suite number. If a legitimate scholarship program uses a mail box, they almost always include their street address (and telephone numbers) on their stationery.
Operating out of a residence: This is not a sure sign of a scam because there are legitimate home-based businesses, but a residential address can tell you something about the size of the organization.
Masquerading as a federal agency: If the offer comes from an organization with an official sounding name like "National Science Federation", "National Scholarship Foundation", or "National Science Program", check to see if there really is a federal agency with that name. Don't trust an organization just because they have an official-looking "governmental seal" as their company logo.
Resist high-pressured tactics such as "We'll do all the work for you." Don't be fooled. There's no way around it, you must apply for scholarships or grants yourself.
Unusual requests for personal information: Do not give out your credit card, bank or checking account numbers to any solicitors who claim they need it for you to be eligible for either a contest or access to "exclusive" scholarship information. Get information in writing first. It may be a set-up for an unauthorized withdrawal.
Notification by phone: If you have won a scholarship, you will receive written notification by mail, not by phone. Even if the sponsor calls to congratulate you, they will follow up with a letter in the mail. if the phone call asks you for money--hang up.
High success rates: Overstated claims of effectiveness are a good tip-off to a scam. If something sounds too good to be true, it probably is.
Excessive hype: Scams try to get you so excited that you'll ignore your natural sense of caution. if the brochure or advertisement uses a lot of hyperbole (e.g., "free money", "win your fair share" and "everybody is eligible") or mentions "the $6.6 billion in unused scholarships", be careful.
Disguised advertising: Don't believe everything you read or hear, especially if you see it online. Unless you personally know the person praising a product or service, don't believe their recommendations.
A newly-formed company: Ask the company how long it has been in business. if it was formed recently, ask for references. Most philanthropic foundations have been established for many years.
A Florida or California address: A disproportionate number of scams seem to originate from Florida or California addresses.
Resource listing from Dakota Guidance Department, Dakota High School