7 Common Scholarship Scams and How to Detect Them

By Chelsea Jackson on April 14, 2017

Every year thousands of students apply for competitive scholarships. Legitimate scholarship opportunities take countless hours to apply for as you draft the perfect essay and supplemental application materials. Plus, you have to repeat the same taxing process over and over again for each individual application. Other than losing sleep and your sensibility, scholarship season can also rear some other dangers: scholarship scams.

Scholarship scams might seem like authentic scholarship opportunities, but they’re very different. Often, these scams also seem too good to be true, which is the case because scholarship scammers prey on students’ vulnerability: their desire for pain-free scholarship apps.

Every year approximately 350,000 students fall victim to these scams. These scholarship scammers steal more than $5 million in damages from families each year, which can be a financial disaster for any prospective college student. Fortunately, there are several ways to detect a scholarship scam.

Image via pixabay.com

1. Fees

It can seem pretty self-explanatory that any scholarship application that requires an application fee is a scam. However, a lot of these same applications offer a refund if you’re offered a scholarship. Because the application is not a genuine scholarship opportunity, the scammers simply claim that you aren’t qualified for the scholarship and profit off of your fees.

2. Search services

There are several websites and services that claim to search and apply for scholarships on your behalf. Some of these search service scams require a payment upfront, but most of these services don’t require any form of payment. While it might seem safe to try a search agency that doesn’t require any fees, these scammers benefit from asking you invasive questions in an attempt to steal your identity.

3. Open eligibility

Open eligibility scholarship scams include scholarship applications where anyone can apply, regardless of academic achievements or otherwise. It is important to remember that scholarships are only given to students with financial need and/or academic merit. If a scholarship application has no requirements in order to apply, then it is likely a scam.

4. Guaranteed services

Nothing in life is guaranteed, and financial scholarships are no different. Any scholarship or service that offers a “money back guarantee” in their application disclosure indicates a red flag. Likewise, there are also thousands of scholarship scams that claim to guarantee a monetary prize. By definition, a scholarship is allocated based on your need and/or merit. If you are guaranteed a prize simply by applying, then there aren’t any credentials necessary for the scholarship.

5. Time sensitivity

Many scholarships have deadlines for eligibility; however, you should be wary of any “scholarships” that claim to be “first come, first served.” Any type of application that claims to only be available on a first-come-first-served basis is an illegitimate opportunity. These types of scholarship scams also try to entice you to apply by stating that you are pre-qualified for their application.

Unless you cross check your GPA, skills, family income, and other background information with each individual scholarship application there is no way to know if you are qualified. If a scholarship claims to be on a first-come-first-served process, then these scholarships likely have no pre-requisite qualifications. This makes it easier for you to notice this fraudulent activity.

6. Opportunities without applications

These scholarship scams often contact you directly, claiming that you have won an exclusive scholarship. Typically these scammers call your cell phone in an attempt to overwhelm you and gain information to either steal your identity or to profit. It is important to keep records of any and all scholarships (or applications in general) that you submit. This way, you can check your personal references to see if you did indeed submit an application to a specific scholarship opportunity.

If you need time to verify any information, you should always inform a scholarship representative that you need time to look over the information. If the representative becomes overtly brash or tells you that the offer won’t last long, this is a clear warning that the scholarship is a scam.

7. Broad generalizations

Many scholarship scams will include one or more sweeping generalizations, which often seem like pushy advertisements. These generalizations or claims can range from, “You won’t get this information anywhere else,” to “thousands have applied.”

Generalizations can also include claims that it has an absurdly high percentage of scholarship recipients. While it may seem enticing that a lot of students have received this scholarship in the past, any broad statement without proper evidence is likely a fictitious assertion.

If you believe any scholarship opportunity might be fraudulent, you should report these scams immediately to the appropriate government agencies. The following government agencies work to prosecute scholarship scams:

Federal Trade Commission (FTC). File a complaint using the online complaint form or by calling 1-877-FTC-HELP (1-877-382-4357) or 1-202-FTC-HELP (1-202-382-4357).

State Attorney General, especially the Bureau of Consumer Protection

U.S. Postal Inspection Service (USPIS). Call the Postal Crime Hotline at 1-877-876-2455.

U.S. Department of Education, Office of the Inspector General.  You may report financial aid fraud to 1-800-MIS-USED (1-800-647-8733) or use the online complaint form.

The National Fraud Information Center (NFIC) forwards complaints to appropriate government agencies and can be reached through its website, fraud.org, or by calling 1-800-876-7060.

Scholarship scams can also be reported to the Better Business Bureau (BBB).

The College Scholarship Fraud Prevention Act of 2000 (P.L. 106-420) offers clearly defined penalties for scholarship scams.

It’s vital to note that you shouldn’t rely solely on an authentic name when reviewing whether or not a scholarship opportunity is safe. Often, scholarship scammers will include credible terms in their faux scholarship’s title, such as national, federal, or foundation. In the past, these same scholarship scammers have already created their own fake organization websites and testimonials to gain credibility.

As a general rule of thumb, you should remember that the purpose of a scholarship or grant is to give you money to fund your academic endeavors, which is why it wouldn’t make sense for a scholarship to ask for any money before, during, or after the application process.

Likewise, you can ensure your safety from scams by relying on credible sources to search for scholarships, such as your university’s scholarship website and financial aid office.

I live in Iowa now, but I was born and raised in Florida. When I'm not writing, I'm probably drawing or cooking.

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