There are a lot of scamsters in the business of fake scholarships. It is essential to understand how they operate. For this, it is necessary to understand how scholarships work and how they use the scholarships to lure the students. Scholarships are a type of financial students based on several factors. Scholarships are basically free money that you can use to pay for all, or part, of your educational costs. Read more our page Financial Aid and Scholarships for Online Graduate Students where we cover the following topics:
- Financing an Online Master’s Program: Getting Started with FAFSA®
- What are the Different Types of Financial Aid for an Online Master’s Program?
- Examples of Financial Aid Opportunities for Online Master’s Programs.
- Resources for Finding Financial Aid and Scholarships for Grad School.
Fake Scholarships are a fraud where the scammer promises to provide guaranteed college scholarships. Most scholarship scams seek to get students and their families to pay money to the scammer upfront, but some scams also involve identity theft.
According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, unscrupulous companies guarantee or promise scholarships, grants, or fantastic financial aid packages. Many use high-pressure sales tactics to get you to pay upfront or risk losing out on the scholarship. If you have to pay money to get money, it is probably a scam. Never pay to get information about scholarships or to apply for a scholarship.
How to know if a scholarship is fake?
Fake Scholarships are increasingly becoming a problem, and the con artists are improving their methods. But here are some of the most common phrases used in scholarship scams:
“We’ll do all the work for you“
No company can do all the work on your behalf. All they can give you is a list of potential scholarship options, which you are then required to apply for by filling out the application and submitting it.
“We only charge a small fee“
Most scholarship scams charge some kind of fee. The fee may seem small and reasonable, such as an application fee, processing fee, or taxes, but legitimate scholarships do not charge any fees.
“We need your financial information for confirmation purposes“
Beware of scholarships that ask for your credit card number or Social Security Number. Scholarships do not need your credit card number to verify your identity or hold the scholarship. Scholarship providers are not required to report scholarships to the IRS unless the scholarship is a fee for services.
“You won a scholarship”
One scholarship scam deceived many students by sending them a letter that congratulated them on winning a scholarship but asked them to pay the application fee. But when you haven’t applied for the scholarship yet, you receive an email or letter stating that you have been selected for a scholarship, then it is definitely a scam. It’s a warning sign which says that you are dealing with a scammer. These companies generally want to collect all your information – both financial and personal.
“We are a foundation or tax-exempt charity“
Check whether the organization really is a foundation using the Exempt Organizations Select Check tool, formerly known as IRS Publication 78.
“We offer a guarantee“
Nobody can guarantee that you’ll win a scholarship!
“We have exclusive access to scholarships“
Some paid scholarship matching services claim that you can’t get this information anywhere else. That is never the case. All the information regarding the scholarship is freely available and easy to access through the internet. If anyone states that they have exclusive access for information for an exchange of money, it’s definitely a scam.
“We have a high success rate“
Paid scholarship matching services sometimes say that a high percentage of their clients win scholarships. But only about 1 in 8 students win private scholarships, and the average amount received is less than $4,000.
“Millions (or billions) of scholarship dollars went unclaimed last year“
The unclaimed aid myth has been around for decades. It is just as false now as it was 40 years ago. Most scholarships have more applicants than money. The few scholarships that go unclaimed cannot be claimed because they have very restrictive criteria.
“You must act now“
Although scholarships do have deadlines, they aren’t awarded on a first-come, first-served basis. There is no need to act unless you are submitting your application for the scholarship by the deadline. You don’t need to act to get a scholarship. If you are selected for a specific scholarship, then it’s yours.
“We are approved by a reputable organization“
Some scams will falsely claim to be affiliated with the U.S. Department of Education or another government agency. The federal government is prohibited from endorsing private businesses!
“We’ll send you a check“
This is the most devious scam. The check they send to you is more than the value of the scholarship. The scammer will claim that the check was issued in error but cannot be canceled. They instruct you to deposit the check and send them your check for the excess that they “overpaid” you. The scholarship check may look legitimate, but it is a forgery and will bounce after you deposit it. Your bank will probably charge you for the bounced check. And, the check you send them will be deducted from your account.
Too Good to Be True
Some scammers guarantee that they can deliver scholarships on behalf of students or award scholarships in exchange for an advanced fee. Others may only provide a list of readily available scholarship sources. Still, others tell students they’ve been selected as “finalists” for awards that require an up-front fee. Sometimes, these companies ask for a student’s financial information as confirmation of identity, then debit the account without the student’s knowledge. Other companies only require a small fee and then provide nothing of value.
However, some legitimate scholarship search engines do charge an advanced 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. However, there are usually free sources of the same information. Always remember that legitimate companies never guarantee or promise scholarships or grants.
Watch out for scams that offer a free seminar or a one-on-one interview. Both are nothing more than a high-pressure sales pitch for their “scholarship services.” Don’t be rushed into paying at the seminar. Avoid high-pressure sales pitches that require you to buy now or risk losing out on the scholarship opportunity. Be wary of “success stories” or testimonials of extraordinary success – the seminar operation may have paid “shills” to give glowing stories.
These scholarship seminars are a session where the representative will pressure you to buy their products, such as scholarship search services or the resume formatting service, which you don’t need, but they will still force you into it.
If it is a Scholarship Scam…
If you encounter a scholarship scam, report it to the following law enforcement authorities. By reporting a scholarship scam promptly, you may help save other students from becoming victims of scholarship scams.
Report the scam to the National Fraud Information Center (NFIC) at 1-800-654-7060 or visit www.fraud.org. The NFIC shares information with the Federal Trade Commission (FTC) and state attorney general.
You can also report the scam directly to the FTC by filing a complaint form or calling 1-877-FTC-HELP (1-877-382-4357). The FTC published an article about scholarship and financial aid scams, as well as an annual report to Congress about scholarship scams.
The U.S. Postal Inspection Service investigates mail fraud, which includes scams sent by postal mail. Report such scams using the Postal Crime Hotline online complaint form or by calling 1-877-876-2455 (say “fraud”) or 1-800-654-8896.
To report fraud involving federal student aid funds, such as FAFSA fraud rings, contact the Office of the Inspector General at the U.S. Department of Education by calling 1-800-MIS-USED (1-800-647-8733) or filing a report using the OIG Hotline.
The College Scholarship Fraud Prevention Act of 2000 (P.L. 106-420) created enhanced penalties for scholarship fraud to encourage law enforcement to prosecute scholarship scams.