Scholarship
Scam Characteristics
How can a student tell the difference between a legitimate
scholarship search service and one that is a scam? There is no sure-fire method. However, by taking notice of these warnings
signs, the student will be better prepared.
Some of the warning signs include:
The
Free Seminar
An offer letter in the mail usually characterizes a scholarship
scam. The letter invites the recipient
to an “interview” or “free seminar” at a nearby hotel, activity center, or even
a public or private school. These
seminars are usually sales pitches for financial aid/scholarship consultants
skillfully delivered as information sessions.
Ego
Stroking
This effective technique snares many students, parents and even
teachers. This scam offers a student the
opportunity to see his or her name and achievements in print. Who could resist such an offer? For a modest fee, students have their names
and achievements printed in a national directory. All individuals listed in the directory are
also given the opportunity to compete for scholarship awards.
It is important to note that many organizations of this type are
legal. They clearly indicate to the
student that they are “for-profit” organizations. What students and parents fail to realize is
that the scholarships only cover 5 to 10 percent of all entries. Is this misleading? Perhaps.
But to be mindful of the fact that a name in print does not imply cash
in pocket.
Pay
to Play
This scam is characterized by a letter indicating that the
student has won a scholarship. Similar
to the Guaranteed Winner scam which guarantees the student will win, this scam
goes one step further and actually indicates that he or she has already won. It goes on to say that the only thing the
student needs to do is claim his or her winnings are mail a “shipping and
handling fee” or pay the up-front taxes on the award before it can be released.
Notification
by Phone
All legitimate scholarship organizations notify winners in
writing. Even calls of congratulations
by a scholarship sponsor are followed with written notification.
Time
Pressure
Whenever the student is rushed into a commitment or response, he
or she should be wary. Phrases such as
“first-come, first-serve and tactics that pressure the student to decide within
a very short time frame are designed to force the student into a quick and less
thoughtful decision.
The
Name Game
The name game is a very effective scam that makes use of similar
sounding or official sounding names. Key
words that are used to sound official are national, federation, administration,
or bureau.
Examples are the National Federation of Education, the Bureau of
Educational Administration or the Texas State Scholarship Federation. All of these are official sounding names, but
all of these organizations are fictitious.
These names sound even more impressive when there is an official
looking seal on the envelope, or when the return address is
Another effective twist on the name game is one where names
sound very similar to the real thing.
One example is Who’s Who in U.S. High Schools, Who’s Who in
American High Schools, and U.S. High Schools Who’s Who. This name twist can be confusing to the
student or parent who is not thoroughly familiar with the true organization
identity.
False
Sponsorship
Claims of endorsement by the U.S. Department of Education or the
Better Business Bureau (BBB) or any other federal agency are false. The BBB and federal agencies never endorse
private enterprises.
No
Phone Number
If scholarship application materials do not include a telephone
number, and/or they do not have a listing with directory assistance, use
caution. Legitimate organizations and
foundations always have a telephone listing.
Guaranteed
Winners
No legitimate organization can guarantee a scholarship to all
applicants just for applying. An
organization cannot guarantee a set amount of winnings to any applicant.
A twist on this guaranteed winning theme is the guaranteed
refund. “If you don’t win a scholarship,
we will guarantee a refund of your application fee.” Semantics is usually the key here. When the applicant is guaranteed $1,000 or
his or her money back, the scam artist really means that the applicant is
merely guaranteed $1,000 in financial aid resources, not actual scholarship
finds. Even in the rare instance where
refunds are made, they are made in the form of service credits or savings bonds
which have maturity dates far into the future.
P.O.
Box Return Address
If there is not street address other than a residential address,
or only a P.O. Box address is listed as the return address, be wary. Some companies even disguise a P.O. Box as a
suite number. For example, “
Coast
to Coast
A disproportionately large number of scams seem to originate in
Personal
Information Requests
Avoid all requests for bank accounts numbers, credit card
numbers, or Social Security Numbers. A
Social Security Number is not needed for private scholarship processing or
awarding. It is not even a requirement
for identification purposes.
Application
Fees
Application fees, no matter how small, are almost always a
warning sign of a scholarship scam.
Non-profit organizations, as most scholarship foundations are
classified, are prohibited from charging an application fee. Even id the company used all of the
application fees for scholarships, what would the gain be by charging a fee in
the first place? Be wary of fees.
Inability
to Substantiate Awards
If the organization cannot substantiate its previous winners,
the scholarships it sponsors, and the disbursement of awards, be wary.
Unsolicited
Information
Scholarship foundations receive thousands of applications for
the scholarships they administer. It is
not in their best interest to solicit applications. If you receive unsolicited information from
an organization, use caution.