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 Beware of Scholarship Scams
This is just one of the different types of fraudulent schemes targeting students and their families looking to finance higher education. This particular scheme started with a free seminar for financial assistance, which turned out to be the equivalent of a sales pitch for this group's costly and unnecessary service. Several other scholarship-based scams are also floating around the country, with a disproportionate number originating from California. You can protect yourself by recognizing certain red flags. Beware of any scholarship that requires an application fee since most refund promises of these fees are empty. In addition, requests for administrative fees, loan fees or any scholarship that requires an investment in an annuity or insurance, are generally warning signs that the scholarship offered is not legitimate. Legitimate scholarship sponsors will not require any money up front. Administrative or disbursement fees associated with student loans are deducted from the loans themselves and should not require any out of pocket payment.
There are warning signs in scholarship offers that are common to other types of marketing scams. First, any service which makes guarantees regarding scholarships is likely to be looking for an easy way to pocket your money. If contacted by phone, be suspicious if you didn't solicit the service. Always ask how they obtained your information and for information about their company as well. Research the company. If it checks out to be legitimate, always get any offer in writing before committing to anything. If you receive notification of a scholarship award by phone, wait for the written verification by mail to ensure its validity.
The best way to protect yourself from fraudulent scholarship services is to start with a trusted source. A high school guidance counselor or the financial aid office at your prospective schools is usually the best place to turn for information on how to obtain educational financing through federal loans and scholarships. If you seek to educational funding through private loans, inquire from your credit union or bank, or seek out a proven lender such as Sallie Mae at www.salliemae.com. If you choose to use a scholarship service, start the evaluation process by researching the Federal Trade Commission website at www.ftc.gov.
If you or someone you know has fallen prey to any of the mentioned schemes they should contact the following organizations:
National Fraud Information Center
1-800-876-7060
State of California Attorney General's Office
(800) 952-5225
http://caag.state.ca.us/
| Federal Trade Commission
1-877-FTC-HELP
www.ftc.gov
U.S. Department of Education Office of the Inspector General
1-800-MIS-USED
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-David Cohn
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Tax Time!
The infamous April 15th deadline is looming. If you haven't done your taxes yet, you are not alone. Consumers who use outside professionals to prepare their taxes, need to be aware of the many pitfalls that can happen - especially as time grows short. Here are some links to help you become more informed:
Attorney General Lockyer Urges Consumers to Avoid Exorbitant Loans Disguised as 'Instant' Tax Refunds
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http://caag.state.ca.us/newsalerts/2004/04-015.htm
Better Business Bureau - Tips on Filing Taxes On Line
http://www.tucson.bbb.org/newsrelease.html?newsid=38&newstype=1
Better Business Bureau - Avoiding Fraudulent Tax Preparation
http://www.phoenix.bbb.org/newsrelease.html?newsid=160
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