NEW YORK (MainStreet) — Financial aid scams have declined throughout the previous decade, with the Federal Trade Commission receiving just 718 such complaints in 2010, well under 1% of the total complaints filed with the agency, the FTC revealed in a report this week. However, an increasing number of these scams involve fake scholarship offers.
The report, which the FTC has issued each year since Congress passed the Congressional Scholarship Fraud Prevention Act of 2000, analyzed the complaints and found that scammers have moved away from pretending to be financial aid consulting services and instead are pitching “bogus scholarship and grant search firms.”
While the prevalence of these scams may be low, they can still do damage to a family’s finances and college planning. Fortunately, the FTC and the Department of Education each offer a few helpful red flags that a “scholarship” is actually a scam.
The scholarship costs you money. If the person or organization claims to have a scholarship or financial aid offer for you with a fee attached, ignore it. They may simply take your money and run. Besides, there are plenty of free tools for finding these offers yourself, including websites operated by the Department of Education and the Federal Student Aid Information Center.
The person asks for your financial information upfront. Along the same lines, if someone claims to be from a financial aid service and asks for your credit card or bank account number to redeem or hold your aid offer or to charge a processing fee, this is bad news. As the Federal Student Aid office points out, not only is this unnecessary but it could put you at risk for identity theft.
Limited-time offers. Keep in mind that you are not looking to purchase a new microwave here, you’re looking for money for college. When the person pitching you applies questionable sales tactics like pressuring you into buying something right away, be sure to take a step back. At the very least, take the time to review the other free services mentioned above to get a sense of what’s out there before you commit to anything. If you continue to have trepidations about the financial aid firm you’re dealing with, consult the Better Business Bureau to find out more about the company’s reputation.