Scholarship Scams

Scholarship scams are so common, that one could easily think they’re a new form of art. Don’t allow yourself to be duped by a scholarship scam artist; you’ll end up spending valuable time and unnecessary amounts of money for absolutely nothing. These scams are fairly easy to avoid as long as you recognize the warning signs which you’ll find in large clusters whenever you happen upon a scholarship scam.

Things to look out for:

A large processing fee and a small award.
Or a processing fee of any size coupled with a small award, really. When you see this, most likely, the scholarship provider is offering the award solely for the purpose of collecting the processing fee. Chances are that most scholarships with a fee attached won’t pay up in the end, even if they have received enough income from the supposed "processing fee" to cover the cost of the award.
Scholarship databases that charge you to register.
Scholarship information is and has always been public information. Stick to the reputable, free scholarship search services like Scholarships.com. Some sites will allow you to fill out a profile and search for scholarships, but charge you up to $100 to see your results. Other sites "guarantee" that they can get you a cash scholarship in exchange for a fee. They'd have you believe that you have no chance of getting a scholarship unless you buy their service. Don't believe it. Typically, scholarship search services that charge a fee claim to have exclusive access to scholarships, or offer to sell you a list or directory of scholarship providers. Their databases are built on publicly-available information and are very unlikely to offer you opportunities not available from free search websites. Scholarship providers want you to learn about their scholarship and, as such, they make it as easy as possible to find thier scholarship information, often by listing their scholarship with a reputable, free college scholarship search engine like Scholarships.com. These fee-based scholarship sites are simply charging for a process they have developed for searching the database of public scholarship information. Why pay for this when you could search and receive this information elsewhere for free?
An announcement that you have won an award for which you have not applied.
Of all the scholarship scams, this is probably the most detectable. You always have to apply for scholarships in order to receive them. If you receive an e-mail that says you have won a scholarship from an organization that you have never heard of, let alone applied to, ignore it. Such e-mails could easily be an internet phishing scam or some other type of scholarship scam.
Companies who claim to do all of the work for you.
You and only you can apply for scholarships. If a company requests compensation to apply for scholarships for you—don’t buy it. Scholarship offers typically request a fair amount of personal information, writing samples, and require a considerable amount of work that no one other that you can do.
Search engine sponsored results.
The sponsored links or sponsored results in a "scholarships" search are just advertisements and can include sweepstakes, contests, lenders, online schools, or whatever some marketer decides "scholarships" means. If you decide to use a general search engine, choose the organic search results, as they are more likely to lead you to legitimate scholarship opportunities like those at Scholarships.com.
Sweepstakes and contest websites.
These sites offer no real scholarships, only a single dollar-amount prize. They'll waste your time, gather your personal information (including name and email address), and bombard you with advertisements. At the end, your "scholarship" is an entry into a random sweepstakes. You'd have better luck just buying a lottery ticket. These websites appear only in the sponsored or paid search results at the search engines as they have no scholarship content or academic value.
Aggregation sites.
The sites compile data from multiple sources without acknowledging the massive amounts of overlap or offering any real way to narrow the field to a usable level.

Scholarships.com offers our services free, but not everyone that claims to offer scholarships does. There are a lot of people out there looking for your money, and it can sometimes be hard to distinguish legitimate websites from scams. A good first step is to ask yourself, "What will this cost me? What will I get out of it? Can I get this for free elsewhere?"

It's not the size of the haystack that matters, but the quality of the needle. If a site has a thousand scholarships listed, but only ten or twelve for which you are eligible, the remaining scholarships will serve as little more than a distraction.

Scholarships.com has not only a large, comprehensive, and free scholarship database, but also a sophisticated search algorithm that ensures you can find the scholarships that are the best fit for you.

For your convenience, we have gathered additional material on scholarship scams below.

Students Getting Stung Trying to Find Money for College

Need money for college? Doesn't everybody? With tuition bills skyrocketing, and room and board going through the roof, students and their families are looking for creative ways to finance a college education. Unfortunately, in their efforts to pay the bills, many of them are falling prey to scholarship and financial aid scams.

According to the Federal Trade Commission, unscrupulous companies guarantee or promise scholarships, grants or fantastic financial aid packages. Many use high-pressure sales pitches at seminars where you're required to pay immediately or risk losing out on the "opportunity."

Some unscrupulous companies guarantee that they can get scholarships on behalf of students or award them "scholarships" in exchange for an advance fee. Most offer a "money back guarantee"- but attach conditions that make it impossible to get the refund. Others provide nothing for the student's advance fee - not even a list of potential 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 checking account to "confirm eligibility," then debit the account without the student's consent. Other companies quote only a relatively small "monthly" or "weekly" fee and then ask for authorization to debit your checking account - for an undetermined length of time.

The FTC cautions students to look and listen for these telltale lines:

"The scholarship is guaranteed or your money back."
"You can't get this information anywhere else."
"I just need your credit card or bank account number to hold this scholarship."
"We'll do all the work."
"The scholarship will cost some money."
"You've been selected" by a "national foundation" to receive a scholarship - or
"You're a finalist" in a contest you never entered.

If you attend a seminar on financial aid or scholarships, follow these steps:

Take your time. 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 opportunity. Real scholarship opportunities are never going to be sold through nerve-racking tactics.

Investigate the organization you're considering paying for help. Talk to a guidance counselor or financial aid advisor before spending your money. You may be able to get the same help for free.

Be wary of "success stories" or testimonials of extraordinary success - the seminar operation may have paid "shills" to give glowing stories. Instead, ask for a list of at least three local families who've used the services in the last year. Ask each if they're satisfied with the products and services received.

Be cautious about purchasing from seminar representatives who are reluctant to answer questions or who give evasive answers to your questions. Legitimate business people are more than willing to give you information about their service.

Ask how much money is charged for the service, the services that will be performed and the company's refund policy. Get this information in writing. Keep in mind that you may never recoup the money you give to an unscrupulous operator, despite stated refund policies.

The FTC says many legitimate companies advertise that they can get students access to lists of scholarships in exchange for an advance fee. Other legitimate services charge an advance 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. And, there are scholarship search engines on the World Wide Web. The difference: Legitimate companies never guarantee or promise scholarships or grants.

Project $cholar$cam

Project $cholar$cam is the FTC's ongoing project to prevent and prosecute scholarship fraud. The FTC's law enforcement actions have resulted in the entry of federal court orders prohibiting future misrepresentations against 11 companies and 30 individuals. Most of the orders permanently banned the defendants from marketing scholarship services, and many require the defendants to post performance bonds before engaging in telemarketing. As a result of the FTC's law enforcement actions, more than $560,000 has been refunded to consumers or disgorged to the U.S. Treasury. In one case, the civil action by the FTC led to criminal prosecution by DOJ.

Project $cholar$cam also includes a comprehensive consumer education campaign. The FTC has set up a Web page:
www.ftc.gov/scholarshipscams

The FTC's Web site includes information about scholarship scams and tips for consumers on how to avoid fraudulent marketing schemes. $cholar$cam information is also available on the FTC's Spanish language Web site:
www.ftc.gov/bcp/conline/edcams/ojo/s-index.htm.

Department of Education

The Department of Education also monitors scholarship fraud and offers several consumer informational products. The "Looking for Student Aid" brochure lists typical scholarship scams and tells students where to find free information about financial aid. A poster headed "Don't Get Stung" reminds students that there is no fee associated with learning about or submitting the Free Application for Federal Student Aid. The poster recommends that the student contact a high school counselor, college financial aid administrator, or ED for free information on financial aid. "The Student Guide" and "Funding Your Education" are booklets primarily covering federal student aid, but both mention scams and how to avoid them. The "High School Counselor's Handbook" covers the basics of the federal student aid programs and includes both a scam warning for counselors and a one-page scam awareness sheet that can be photocopied and distributed to students. These materials are available at www.studentaid.ed.gov or by calling 1-800-4-FED-AID (1-800-433-3243; TTY: 1-200-730-8913). The ED and FTC Web pages link to each other.

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