Whoa! Just Say No to Scams
You’ve probably heard the saying, "If it’s too good to be true, it probably is." Well, that saying holds true most of the time. We all want to believe that we’ve won an all-expense-paid trip to the Greek Isles or that a long-lost, rich uncle from California left us something in his will, but it’s usually just a scam to get our money. Here are some common cons you’ll want to be aware of to keep your money safe.
Common Scams
College Financial Aid Scam
A company offers to help you find a scholarship. When you contact them, they ask you to pay a fee to begin the search. Don’t take the bait! Generally, the scholarship information provided by these scammers is available for free to anyone. Guidance counselors and financial aid officers at colleges and universities are great sources of reliable, free scholarship information.
Loan Scam
This is an illegal scam in which you see a "lender’s" advertisement about personal debt consolidation. You call the number and they ask for minimal information about you and don’t offer information about the company. During your conversation, they approve your loan and instruct you to send in a fee for the promised loan – which never arrives.
Pyramid Scam
Pyramid scams can include recruiting additional members and serving as a distributor of a product like beauty or health goods. Typically, you’re asked to pay a membership fee up front. You’re instructed that once members are recruited to serve under you, you’ll profit from their sales. There aren’t enough potential members to keep pyramids growing steadily for even a few months, and they’re illegal to boot!
Credit Repair Scheme
A company will offer to erase your bad credit history or remove bankruptcy from your credit records for a fee. They ask for payment up-front. Unfortunately, there are no quick or easy ways to repair a poor credit history. If you fall for it, you’ve been taken by an illegal scam.
Other Renegade Deals
Rent-to-Own
Rent-to-own companies rent and sell products such as appliances, furniture, and electronics. You can rent the product for a short period of time and return it, or agree to rent the product until you pay enough to own the item. Purchasing an item from these companies usually costs two to five times as much as purchasing the goods from a department or appliance store. This type of financing is legal; however, you’ll lose money this way.
Payday Loan
Payday loans allow people to get cash with no credit or background checks. Lenders ask you to bring in a post-dated check and paycheck stubs to verify when you’ll repay the loan. The interest rate is extremely high, possibly more than 400%. This type of loan is legal; however, because of the interest rate, it would not be the best option
Reporting Scholarship Scams and Suspected Financial Aid Fraud
If you feel that you have become a victim of a scholarship scam or financial aid fraud, please report it immediately.
- U.S. Department of Education's Office of Inspector General (OIG): The OIG may be contacted by calling its hotline at 1-800-MIS-USED (1-800-647-8733), emailing oig.hotline@ed.gov, or by completing a complaint form. Special agents in the OIG investigate fraud involving federal financial aid dollars.
- Federal Trade Commission (FTC): The FTC has an online complaint form and a hotline at 1-877-FTC-HELP (1-877-382-4357).