Scholarship Scams Part I: No Guarantee If There Is A Fee





Scholarship Scams Part I: No Guarantee If There Is A Fee


This is the first part of a two-part series focusing on scholarship scams. This first installment examines the warning signs of scams. Part II will show how the Federal Trade Commission works to curtail scams. We will also report on the proliferation of scholarship scams on the Internet.


Let's say you or one of your children has been busy applying to colleges and trying to find scholarships. One day you receive an e-mail or U.S. Postal Service letter that looks something like this:


     The National Biological Science Scholarship Center (NBSSC) has selected you as a possible recipient of one of ten     scholarships worth $5,000 each. The NBSSC is approved by The National Science Scholarship Program (NSSP).Tofind  out if you qualify for one of these prestigious awards, send a check of $25.00 payable to NBSSC.


Does this sound too good to be true? It is. It is probably a scam. Bogus scholarship services can use a variety of tactics, phrases, and media to attract your interest and garner your money. They prey on your vulnerability during what can sometimes be a very busy and stressful time.


Postcards, letters, telemarketing, and, most recently, the World Wide Web are used to communicate fraudulent scholarship information. They often guarantee that you will receive a scholarship. Many scams ask for a fee. As a rule of thumb, you should be suspicious when you see the words "fee" and "guarantee" in regards to scholarship information, searches, and award services.


Watch out for these telltale signs of scholarship scams:


Don't Send Money: "For a nominal fee…"


Legitimate scholarship sponsors do not charge fees of any kind. Do not send money with a scholarship application.


Be suspicious of any scholarship that requires an application fee — whether it's $2 or $5 or $500. Even if a phony sponsor asks for only a $5 fee, he or she can make a very good living by receiving only 10,000 applications. Don't pay his or her salary.


There Are No Guarantees: "You have been selected! Scholarship Approved! You're a Finalist!"


If an organization you have not applied to sends literature stating that you have been selected to receive a scholarship, be very wary. You may have been selected, but it is not for a scholarship. A scam company that bought your name and address has selected you to send them money.


Beware of scholarship matching services that guarantee you'll win a scholarship or they'll refund your money. They may send you a report of matching scholarships but there is no guarantee that you will qualify for awards. Meanwhile, whatever fee they charged will be difficult, if not impossible, to get back.


There are plenty of comprehensive scholarship-matching services online. offers a free science and engineering scholarships search through the Scholarship Resource Network.


No Secret Formula: "Information you can't get anywhere else"


If you get unsolicited literature that says that — for a price — they can send you secret information that you can't get anywhere

else, delete the e-mail or throw the letter into the nearest trash receptacle.


Scholarship sponsors want to award their grants. They are not hiding any information from you. Go online and do a scholarship search to learn all you need to know about awards and their requirements. Go see your high school advisor or contact the financial aid departments at the colleges and universities you are considering.


No Numbers, Please: "All we need is your bank account and credit card numbers."


Do not disclose your bank account, credit card, ATM card, or social security numbers over the phone, over the Internet, or in writing to anyone who wants to sell you scholarship services. Anyone asking for this information is probably a scam artist. Even if they tell you that the information is needed to "confirm your eligibility" or "verify your identity," don't tell them. They really want the numbers so that they can charge stuff on your account, apply for new credit cards in your name, or withdraw money from your banking account.


Apply Yourself: "We'll do all the work."


There is no getting around it. If you want a scholarship, you're going to have to do the work yourself. You'll have to research scholarships that meet your needs and capabilities. You'll have to write the essays. You'll have to fill out the applications. You'll have to solicit letters of recommendation.


You do not have to pay someone else to do it, especially when you may get very meager results or none at all.


Phony Application Forms: "Apply with us and we'll apply for you."


Some Web sites or letters come complete with application forms that allow you — for a fee — to join their service. These forms may look very similar to actual scholarship applications. They might use the same language and ask for the same information with one glaring exception. They will ask you for your credit card number. (See "No Numbers, Please: 'All We Need is Your Bank Account and Credit Card Numbers' ") above.


Hyperactive Advertising: "Free money," "Everyone is eligible," "Over $240 Million Unclaimed"


If it sounds like hype, it may be nothing but hype. "Free money" means "pay us to find free money for you." "Everyone is eligible" means "Everyone is eligible to find a scholarship by themselves but pay us anyway". "Over $240 Million Unclaimed" is a myth to entice you (see Scholarship Myths and Misconceptions: Finding the Right Fit).


Great Pretenders: "The U.S. Scholarship Agency is endorsed by the Better Business Bureau and the

U.S. Department of Education."


Fraudulent companies often use official sounding names like "U.S. Scholarship Agency". If you haven't heard of the agency, check to see if it really is a government agency.


Also, federal agencies do not make a habit of endorsing or recommending private businesses. The U.S. Department of Education states that it "cannot endorse or appear to endorse any enterprise, product, or service." The Better Business Bureau says it "does not endorse any product, service, or company."


Telephone Run-around: "You may already be a winner"


Legitimate scholarship sponsors do not notify award recipients by phone — they usually mail the notices. Also, if a scholarship

service calls, ask specific questions. If the caller repeats lines over and over, he or she is most likely reading from a script.


Sneaky Seminars: "Pay now or you'll miss out!"


If you are planning to attend a financial aid or scholarship seminar, check with your guidance counselor or financial aid advisor first. If you attend, avoid high-pressure sales pitches that require you to pay immediately or risk missing out on an opportunity. Find out how much the service costs, what services will be performed, and the company's refund policy. Get the information in writing. Ask a lot of questions. If the salesperson is reluctant to give answers, that may be a bad sign.


Federal Trade Commission Targets Fraudulent Scholarship Services


The Federal Trade Commission's (FTC) "Project Scholarship Scam," an ongoing law enforcement and consumer education program aimed at fraudulent college scholarship services, has netted positive results since it began in 1996.


In Part II of this series we will explore the effects this project has had on scams and highlight the FTC's latest efforts to stop scams over the Internet. You'll find out how you can help the FTC by reporting possible scams. We'll also show how Web sites can use the phrases and tactics you have just read about to their advantage by playing on people's fears of Web security.



                                                                           Scott Hicks, Editor

                                                                                        July 25, 2000