Beware of promises from scholarship search firms

The Federal Trade Commission has issued a warning advising students and parents that scholarship search firms swindle as many as 300,000 students each year.

ABSTRACT: The Federal Trade Commission issued a statement on Thursday warning students and parents of the dangers of using some scholarship search firms. Some firms provide no services for the fees. Others provide worthless information. The FTC has filed charges against 11 such firms. Some experts advise using only free scholarship search services such as those offered by high schools, colleges, and libraries. It is unlikely that the FTC or students and their parents will ever recoup any payments made to fraudulent firms.

FTC scholarship scam warning

· The FTC issued a statement Thursday warning students and their families that many scholarship search firms are scam artists.

· These companies promise to look for scholarships that would help students pay the high costs of college tuition, fees, room and board and other expenses.

· According to the FTC, there are some legitimate firms in the field but many are companies that fast talk students and their families out of millions of dollars every year.

· Each year as many as 300,000 students fall for the swindle.

· The FTC also warns people not to give any company personal information such as credit card numbers, bank account numbers, or social security numbers.

Dangers of scholarship scams

· Once they receive advance payment for their services many firms tend to disappear.

· The FTC warning says that the company may never look for scholarships or they may send the client a worthless computer printout which lists dozens or hundreds of scholarships for which the client is not even eligible.

· In June the FTC filed charges against 11 companies, claiming they stole about $10 million from students and their families from all 50 states.

· An FTC official who asked that she not be identified stated that the FTC almost never recovers any money in cases like these.

· The FTC recognizes that many families are desperate, overwhelmed, and frightened by the high and escalating costs of a college education, especially those who have more than one child who will attend college.

· Because of this desperation, and because they are unfamiliar with the process, they are, in many cases, easy victims.

Example

· Susan Carigg, 17, a high school senior from Oshkosh, Wis wants to attend nursing school next year but does not have a lot of money.

· The Carigg’s sent $799 to the Scholarship Search Institute in Phoenix but have received nothing since sending their check.

· Post Office officials told the Carigg’s that thousands of other people fell for the same scam and are also trying to locate the company.

What can the FTC do?

· The FTC normally seeks a temporary restraining order prohibiting companies from engaging in activities the FTC has challenged, or the FTC can freeze the company’s assets.

· However, these the owners of these companies can close the company, move to another city or state, and, in a matter of a few days, open a new company with a new name and continues their illegal activities.

Key Quotes

· The FTC warns, “If you have to pay money to get money, it might be a scam. Be wary.”

· Al Giangelli, a high school senior in Oshkosh, Wis., sent $999 to Financial Aid Finders, using money he had saved from his part-time job. He received nothing. “Now I’m worse off than before. I worked hard for that money and they stole it,” he said. “It’s a rip-off.”

· High school and college counselors provide free services, and so do libraries, said Matt Adamopoulos, head of the Office of Financial Aid at the University of Wisconsin – Oshkosh. He recommends that people use free services exclusively.

Additional Information

· FTC Public Service Announcement - Fraudulent Scholarship Services

· How to Avoid College Scholarship Scams and Tricks

· Free Scholarship Searches