Beware of scams offering to help with scholarship applications

By Russ Van Arsdale, executive director, Northeast Contact
Posted March 25, 2012, at 11:01 a.m.

Postcards offering help with scholarship applications, but containing hidden fees, are landing in mailboxes across the state. Phone solicitors who offer help for a fee simply may be trying to scam consumers.

The above are from news stories in Georgia in the summer of 1995. The Attorney General there was investigating concerns regarding a company’s promise of a full refund if an applicant did not receive at least $1,000 in financial aid. The offer did not mention the $69, nonrefundable processing fee. College Assistance Planning Inc. of Atlanta also asked for $199 before it would send out information.

A couple of years later, the company and seven others had felt the wrath of the Federal Trade Commission’s “Project $cholar$cam.” The crackdown identified roughly 175,000 victims of false claims, broken promises and some $22 million in injury. Summary judgment against Career Assistance Planning in September 1997 ordered it to refund approximately $6 million to an estimated 30,000 victims. Victims of other abusive companies received less than full recompense, according to the FTC.

Fast forward to today, and the same types of rip-off are still around. The Illinois Attorney General’s office says suspect a scam if:

• “You are guaranteed a scholarship.” No one can guarantee that. If there’s a fee involved, it may be difficult or impossible to get a refund.

• “There’s no work involved.” You have to apply for a scholarship. No one can do it for you.

• “There’s just a small fee for our service.” You don’t have to pay for grants or scholarships.

• “We just need your credit card or bank account number.” This is a huge red flag, indicating the “service” wants to help itself to your money. Don’t give out this information. There’s no charge to apply for legitimate scholarships.

• “You’ve won a scholarship” you didn’t apply for or you’re a “finalist” in a contest you didn’t enter. Companies don’t give away scholarships randomly.

• “You can’t get this information anywhere else.” Except on the Internet, at school and local libraries, private companies and other legitimate sources.

It’s worth remembering that private companies may charge a fee for services such as matching a student profile with scholarships for which that student may qualify. However, legitimate companies cannot and will not guarantee a scholarship through such actions.

There are some helpful financial aid seminars available across Maine. But if a company you’ve never heard of makes a presentation, be skeptical; people who stand up and tell success stories may be paid to do so. Be suspicious if seminar presenters are evasive or reluctant to answer your questions. Find out what services they offer, the cost and what the refund policy is; get all this in writing.

Check out a scholarship service thoroughly before using it. See if the company is listed in directory assistance and whether it has an 800 number. If it has neither, be suspicious.

Do a background check on such services; the Better Business Bureau may have a list of complaints you can review. Ask your high school guidance counselor, financial aid adviser or college financial aid administrator if they have dealt with the service.

Get all offers in writing. Be sure there’s information on cancellation and refund policies and guarantees, and make sure you’re clear about them.

The U.S. Department of Education warns about websites that charge a fee to file the Free Application for Federal Student Aid, or FAFSA. There’s online help at the official site, www.fafsa.gov and at the Federal Student Aid Information Center, or FSAIC, by calling 800-4-FED-AID (800-433-3243).

More information is also available at the Finance Authority of Maine website, www.famemaine.com.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, or go to necontact.wordpress.com, or email contacexdir@live.com.

http://bangordailynews.com/2012/03/25/business/beware-of-scams-offering-to-help-with-scholarship-applications/ printed on December 20, 2014