Bogus scholarship search services bilk students and their families of millions of dollars every year, the Federal Trade Commission said Thursday in launching a crackdown on such fraud.
Late last month, the FTC filed charges in federal district court against five companies that the government claims stole nearly $10 million from college-bound students and their families looking for money to pay rising tuition and fees.
An estimated 300,000 students and parents fall victim every year to 100 to 200 fraudulent scholarship search services, according to Mark Kantrowitz, who has written a guide to scholarships. These companies charge a fee to find - often guarantee - scholarships or grants for students, but never do.
Kantrowitz of Pittsburgh, Pa., has developed an Internet page (http:/ /www.studentservices.com/fastweb/html/mkant.html) on financial aid sponsored by the National Association of Student Financial Aid Administrators and maintains a database of complaints about scholarship scam artists that he shares with the FTC and National Fraud Information Center.
“A good rule of thumb is if you have to pay money to get money, it might be a scam,” Kantrowitz said. “Ninety-nine percent of all legitimate scholarship foundations do not charge applications fees. I know of only three that do.”
The FTC cautions students to be wary of companies that claim:
“The scholarship is guaranteed, or your money back.”
“I just need your credit card or bank account number to hold this scholarship.”
“We’ll do all the work.’
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