Money

Scholarship scams come in numerous forms. A typical element of any scholarship scam, however, is that they require you to give them money. Legitimate scholarships and scholarship contests do not require any payment to either apply for or receive the scholarship.

Do not give money or vital information such as bank account numbers to scholarship providers. Even if it is less convenient to receive payments by check than by direct deposit, it is far safer. If a scholarship provider refuses to send a check and insists on direct deposit, be very wary.

Some scholarship scams do pay out scholarships, but your chances of winning are quite slim. These for-profit scholarship contests have an entry fee (from five to fifty dollars). Their goal is to get hundreds of entries, making thousands of dollars while doling out only a fraction of that amount. Many contests never pay out any scholarships, but some are clever enough to pay just enough winners to keep operating for years.

Another typical scam is the guaranteed scholarship search service. These scammers, often using web sites, guarantee that you will receive a scholarship if you pay to use their service. Some of these organizations simply disappear after taking your money while others create so many obstacles to getting a refund that very few people ever actually bother to do what it takes to get back their money.

Also, beware of any organization that charges you to get federal financial aid. While you may get the aid if you use them, the US government does not require any fees for a student to get financial aid. Simply visit their web site and fill out the forms. No scholarship service can make this any easier for you.

Another typical financial aid scam is the advance fee loan. The victim is informed that they qualify for several thousands of dollars in loans, but they must pay a fee in order to receive the money. This is just another variation on the fee-based scholarship. You pay the fee, but you never get any money in return.

One last scam to avoid is the “free financial aid seminar”. These seminars are generally just an attempt to sell you insurance disguised as an investment in your child’s education.

According to a BBC Report, the current top ten scams in the UK are:

Work-At-Home Scams
Scams disguised as work-from-home opportunities.

Telephone Lottery Scams
Phone calls claiming you have won some sort of lottery or prize.

Matrix Schemes
Internet scams offering free gifts in exchange for memberships / information.

Prize Draw Mailings
Letters that claim you have won a prize but must pay an “administration fee.

Property Investment Schemes
Presentations (for a fee of course) that claim they will make you a real estate mogul.

Premium Rate Telephone Number Scams
Advertisements (usually a prize) asking the consumer to dial a toll “premium rate” phone number.

Investment-Related Scams
High-risk investments peddled over the phone or by e-mail.

Nigerian Advance Fee Frauds
The classic e-mail scam from a member of the “Nigerian royal Family” or a high placed official asking for you to help them send you money by sending them money.

Credit Scams
The consumer is offered a loan if they pay a fee. They pay the fee but never get the loan.

Pyramid Schemes
This is an illegal investment strategy that requires a person to invest in some stock or plan, and then get others to invest, for which they get a commission. The idea is that the commissions work their way upward so that the people near the top make tons of money and the people at the bottom lose tons of money.