Ethiopian Exchange Services/ethiox.com

 Scholarship Scams, Be aware!!!

 Part I:  No Guarantee If There Is A Fee

This is the first part of a two-part series focusing on scholarship scams. This first installment examines the warning signs of scams. Part II will show how the Federal Trade Commission works to curtail scams. We will also report on the proliferation of scholarship scams on the Internet.

Let's say you or one of your children has been busy applying to colleges and trying to find scholarships. One day you receive an e-mail or U.S. Postal Service letter that looks something like this:

     The National Biological Science Scholarship Center (NBSSC) has selected you as a possible recipient of one of ten     scholarships worth $5,000 each. The NBSSC is approved by The National Science Scholarship Program (NSSP).Tofind  out if you qualify for one of these prestigious awards, send a check of $25.00 payable to NBSSC.

Does this sound too good to be true? It is. It is probably a scam. Bogus scholarship services can use a variety of tactics, phrases, and media to attract your interest and garner your money. They prey on your vulnerability during what can sometimes be a very busy and stressful time.

Postcards, letters, telemarketing, and, most recently, the World Wide Web are used to communicate fraudulent scholarship information. They often guarantee that you will receive a scholarship. Many scams ask for a fee. As a rule of thumb, you should be suspicious when you see the words "fee" and "guarantee" in regards to scholarship information, searches, and award services.

Watch out for these telltale signs of scholarship scams:

Don't Send Money: "For a nominal fee…"

Legitimate scholarship sponsors do not charge fees of any kind. Do not send money with a scholarship application.

Be suspicious of any scholarship that requires an application fee — whether it's $2 or $5 or $500. Even if a phony sponsor asks for only a $5 fee, he or she can make a very good living by receiving only 10,000 applications. Don't pay his or her salary.

There Are No Guarantees: "You have been selected! Scholarship Approved! You're a Finalist!"

If an organization you have not applied to sends literature stating that you have been selected to receive a scholarship, be very wary. You may have been selected, but it is not for a scholarship. A scam company that bought your name and address has selected you to send them money.

Beware of scholarship matching services that guarantee you'll win a scholarship or they'll refund your money. They may send you a report of matching scholarships but there is no guarantee that you will qualify for awards. Meanwhile, whatever fee they charged will be difficult, if not impossible, to get back.

There are plenty of comprehensive scholarship-matching services online. ScienceWise.com offers a free science and engineering scholarships search through the Scholarship Resource Network.

No Secret Formula: "Information you can't get anywhere else"

If you get unsolicited literature that says that — for a price — they can send you secret information that you can't get anywhere

else, delete the e-mail or throw the letter into the nearest trash receptacle.

Scholarship sponsors want to award their grants. They are not hiding any information from you. Go online and do a scholarship search to learn all you need to know about awards and their requirements. Go see your high school advisor or contact the financial aid departments at the colleges and universities you are considering.

No Numbers, Please: "All we need is your bank account and credit card numbers."

Do not disclose your bank account, credit card, ATM card, or social security numbers over the phone, over the Internet, or in writing to anyone who wants to sell you scholarship services. Anyone asking for this information is probably a scam artist. Even if they tell you that the information is needed to "confirm your eligibility" or "verify your identity," don't tell them. They really want the numbers so that they can charge stuff on your account, apply for new credit cards in your name, or withdraw money from your banking account.

Apply Yourself: "We'll do all the work."

There is no getting around it. If you want a scholarship, you're going to have to do the work yourself. You'll have to research scholarships that meet your needs and capabilities. You'll have to write the essays. You'll have to fill out the applications. You'll have to solicit letters of recommendation.

You do not have to pay someone else to do it, especially when you may get very meager results or none at all.

Phony Application Forms: "Apply with us and we'll apply for you."

Some Web sites or letters come complete with application forms that allow you — for a fee — to join their service. These forms may look very similar to actual scholarship applications. They might use the same language and ask for the same information with one glaring exception. They will ask you for your credit card number. (See "No Numbers, Please: 'All We Need is Your Bank Account and Credit Card Numbers' ") above.

Hyperactive Advertising: "Free money," "Everyone is eligible," "Over $240 Million Unclaimed"

If it sounds like hype, it may be nothing but hype. "Free money" means "pay us to find free money for you." "Everyone is eligible" means "Everyone is eligible to find a scholarship by themselves but pay us anyway". "Over $240 Million Unclaimed" is a myth to entice you (see Scholarship Myths and Misconceptions: Finding the Right Fit).

Great Pretenders: "The U.S. Scholarship Agency is endorsed by the Better Business Bureau and the

U.S. Department of Education."

Fraudulent companies often use official sounding names like "U.S. Scholarship Agency". If you haven't heard of the agency, check to see if it really is a government agency.

Also, federal agencies do not make a habit of endorsing or recommending private businesses. The U.S. Department of Education states that it "cannot endorse or appear to endorse any enterprise, product, or service." The Better Business Bureau says it "does not endorse any product, service, or company."

Telephone Run-around: "You may already be a winner"

Legitimate scholarship sponsors do not notify award recipients by phone — they usually mail the notices. Also, if a scholarship

service calls, ask specific questions. If the caller repeats lines over and over, he or she is most likely reading from a script.

Sneaky Seminars: "Pay now or you'll miss out!"

If you are planning to attend a financial aid or scholarship seminar, check with your guidance counselor or financial aid advisor first. If you attend, avoid high-pressure sales pitches that require you to pay immediately or risk missing out on an opportunity. Find out how much the service costs, what services will be performed, and the company's refund policy. Get the information in writing. Ask a lot of questions. If the salesperson is reluctant to give answers, that may be a bad sign.

Federal Trade Commission Targets Fraudulent Scholarship Services

The Federal Trade Commission's (FTC) "Project Scholarship Scam," an ongoing law enforcement and consumer education program aimed at fraudulent college scholarship services, has netted positive results since it began in 1996.

In Part II of this series we will explore the effects this project has had on scams and highlight the FTC's latest efforts to stop scams over the Internet. You'll find out how you can help the FTC by reporting possible scams. We'll also show how Web sites can use the phrases and tactics you have just read about to their advantage by playing on people's fears of Web security.

Scott Hicks, ScienceWise.com Editor
July 25, 2000

---

Scholarship Scams Part II:
Web scams, the FTC, and how you can help

Scott Hicks, ScienceWise.com Editor

In our first installment (http://www.sciencewise.com/swscholar/scams1.htm) of Scholarship Scams we showed you the warning signs to look for when searching for and researching scholarship information. Scholarship Scams Part II focuses on the proliferation of fraudulent scholarship sites on the Internet, how to recognize a scam on the Internet, what the Federal Trade Commission (FTC) is doing to stop Web scams, the impact of the FTC's Project Scholarship Scam campaign, and how you can help the FTC by reporting possible scams.

The Internet is a terrific tool for researching scholarships. But, like any other media, there are people who benefit at the cost of others. "They prey on parents' fears," says Federal Trade Commission staff attorney Gregory Ashe. These "scammers" create scholarship search sites to make money off of concerned parents and their children who are busy finding ways to finance a college education. The FTC considers Web scams a big problem — so big that it is conducting ongoing investigations and has sent warnings letters to nearly 40 companies.

Many of the same warning signs we discussed in our first installment, "Scholarship Scams Part I," apply to the Web, but there are a few other things you should know about.

Because the Web is so widely used, relied upon, easy to access, and full of information, it’s no wonder that there are plenty of phonies out there. And it's only natural that some people fall for bogus schemes.

Fine line between puffery and fraudulent guarantees

There is a gray area between simple advertising "puffery" and fraudulent claims. An Internet scholarship service can boast that it has the largest scholarship database or get the best results — much the same way a car dealer can claim to have the best selection of recreation vehicles. Puffery is sneaky, but it is not necessarily fraudulent. The difference is when a company guarantees outrageous results, such as claiming that its applicants receive thousands of dollars in scholarships.

The FTC is wary of guarantees. The guarantee you read on the Web site might not be the entire guarantee. The guarantee may state that you’ll get your $50 back if you receive no scholarship money, but there may be hidden restrictions in the guarantees that they don’t tell you about until after you have applied and sent in your fee. These restrictions often make it impossible to get your money back.

Isn’t it worth it to do the paper work yourself and send it directly to the real scholarship organization so there is a real chance that you will get something in return? And, aside from the supplies and stamps, it is free.

Josey Vierra, president of the Scholarship Resource Network (http://www.srnexpress.com) declares, "The only guarantee an organization can offer is that its research information is current and that its search results are accurate."

Poor workmanship

Sometimes, you can judge a book by its cover. An amateurish Web design (with cheesy graphics) that looks like it was slapped together in a damp basement is a warning sign. Basically, poor workmanship means…well, poor workmanship (and service). The FTC's Ashe comments, "It’s funny — not 'funny ha ha', but funny — that a lot of scam sites seem very unprofessional and very unsophisticated."

Another danger sign is misspelled words and poor grammar. If a Web company can’t even spell correctly, do you think that it will deliver a scholarship? "It should make you pause and wonder," muses Ashe.

Prefabricated letters and e-mails

When a Web site says it will send a personalized letter to your scholarship contacts, that usually means that it has an automated mail merge program that spews out generic letters with your name on them and sends them out. You can do a better job of writing your own letters that actually reflect your interests and abilities.

Beware of e-mail from a company you have never had contact with, especially if it say that you are already a scholarship winner.

Don’t fall into the sweepstakes trap of sending in your credit card number or a personal check.

Vierra observes, "In my experience, I have seen many new so-called 'scholarship search services' come and go. Most of these services that provide only ‘scholarship search services’ are only doing so as a ‘get rich quick’ scheme. Many charge $179 and higher and offer false guarantees."

A lack of sound scholarship advice or information about the company should raise your eyebrows.

Taking advantage of Web security fears

Some sites play on people’s fears about online security. They claim that Web sites that offer free scholarship searches and information are security risks. They tell you not to trust the other sites, and then deliver a diatribe on why you should pay them $100 to find information that you can get for free elsewhere. In any case, make sure the company clearly states that it will not sell any of your personal information to anyone.

Before you send personal information to a scholarship Web service, check its privacy policy. (If it does not have one, move on.) Make sure the service offers an opportunity to "opt out" of providing data that you feel is inappropriate.

Off-the-wall scholarship sites

Though not necessarily fraudulent, there are other questionable scholarship sales tactics on the Internet. In our research,

ScienceWise.com found a couple of sites that merely list links to fee-based scholarship services.

There are even scholarship matching services that hire sales "representatives" to work from home. The sales rep is encouraged to sell the service to parents, students, and guidance counselors. The scheme works like this: The rep pays the company $25 per search. Then the rep charges whatever he or she wants at a hefty profit. Businesses like this hire others to do their work for them. It is legal, but shady.

FTC combats Web-based scams

The FTC has sent 37 warning letters to scholarship companies on the Web since January 2000 and continues to search for more. In the letters, the FTC cites the infractions, such as false guarantees, and instructs the company to clean up its act. The results have been that some companies have lifted their guarantees from sites or shut down altogether.

The FTC is currently re-evaluating the sites for infractions. If they are still not satisfied, the next step is to send another warning. If violations persist, the FTC will begin a formal investigation of the company and either file a legal case or negotiate. The severity of the FTC’s actions varies from case to case. It depends on how egregious the violations are or even how successful the site appears to be. Ashe explains, "It can depend on how big the site is. If it is getting one hit a month, there may be no action. If there are lots of hits, then we have a problem that requires further action." Another factor is the degree of the deception. "If a site guarantees a $5,000 award or your money back, that’s a bad sign."

Scammers fought the law and the law won

The FTC has had a good deal of success with "Project Scholarship Scam." The campaign, which began in 1996, has targeted mail, telemarketing, seminar, and other scams. Most cases are settled out of court with the company agreeing to get out of the industry. The companies who fought the FTC in court probably wish they had settled instead. The FTC has brought eight lawsuits against eleven companies and 30 individuals and won every time.

One company, Career Assistance Planning, was ordered to pay over $6 million in consumer compensation and to post a $6 million performance bond before engaging in any telemarketing activity in the future. "They fought it all the way, rolled the dice, and lost. There was overwhelming evidence against them," adds Ashe.

Of the eight cases, the FTC estimates that 175,000 customers were bilked out of $22 million. That is an average of $125 per customer. "We’ve made a sizeable dent. We see less mail and telemarketing activity. Now we’re monitoring the Web."

How you can help

The best help the FTC gets in combating scholarship scams is from consumers. "There are only so many of us at the FTC in
Washington. Most scams are identified by consumers. We target those companies that consumers tell us about," says Ashe.

You can help. If you are suspicious of a scholarship service, call 1-877-FTC-HELP, toll free, or fill out a complaint form on the FTC's Web site at https://www.ftc.gov/ftc/complaint.htm.

Sage Scholarship Advice

Perhaps the best and most encouraging advice comes from SRN's Vierra. It is so simple it may surprise you:

"You don’t need to pay for anything on the Web when there are many good sites that cater to assisting students applying for financial aid. All information regarding the financial aid process is available free of charge. If you choose to pay for a professional service, either college financial planning or a scholarship matching service, make certain to check them out first."

The Web is a great tool. Use it wisely.

Related Links

Federal Trade Commission          FTC homepage: http://www.ftc.gov

Sample FTC case:  http://www.ftc.gov/opa/1997/9709/levy.htm

Scholarship Resource Network Express   http://www.srnexpress.com/

Educational Testing Service(ETS)            http://www.ets.org/scams.html

---

If you are aware of issues related to these kinds of problems,  please please email us at:
 admin@ethiox.com so we can forwarn potential scam victims.

Thanks as always for your positive feedback!.

ethiox admin

---