The Scholarship Scam

If it sounds too good to be true, it is.

College is costly, especially if you're the victim of a scam. The Federal Trade Commission (FTC) and the National Consumers' League warn college-bound students and their parents that bogus companies promising to find a scholarship for them, guaranteed, are on the rise.

Protect yourself and your savings by keeping a sharp eye out for these six signs of a scholarship scam.

1. "The scholarship is guaranteed or your money back."
The FTC says no one can guarantee that they can get you a grant or a scholarship. Companies that offer a refund attach conditions that make it impossible for you to get your money back.

2. "You can't get this information anywhere else."
Check with your high-school guidance counselor or local librarian for free information about current scholarships before you pay someone for the same -- or similar -- information.

3. "May I have your credit card or bank account number to hold this scholarship?"
Always get information in writing before giving out your credit card or bank account number.

4. "We'll do all the work."
There's no way around doing the work. You must apply for scholarships yourself.

5. "The scholarship will cost some money."
Free money shouldn't cost a thing, so don't pay anyone to hold or guarantee you a scholarship or grant. "Some foundations and organizations ask for an application processing fee, which would be about $15. If you do pay this fee, make sure that it goes directly to the organization that offers the scholarship. Don't give money to a third party," says Linda Grant, director of the National Fraud Information Center of the National Consumers League.

6. "You've been selected . . ." or
"You're a finalist. . ."
Don't send money to apply for a scholarship that "you have won" without first checking it out.

To find out how to spot, stop, and report a scam, contact the Federal Trade Commission or call the National Fraud Information Center at 800-876-7060.

More on: Preparing for College