Friday, August 8, 1997

NY CITY $CHOLAR$CAM DEFENDANT SETTLES

Yesterday, the Federal Trade Commission announced that Student Aid Inc., of New York City, and its chief officers, Adel Kovaleva and Raimma Tagiev, have agreed to pay $7,500 and settle charges last August, as a part of Project $cholar$cam.

In its complaint, the FTC alleged that Student Aid guaranteed consumers that for a $97 fee they would get at least $1000 in scholarships or grants. The complaint charged that, in reality, the defendants almost never obtained scholarship money for consumers. The complaint also alleged that the defendants falsely represented that refunds were easily gotten. According to the FTC, Student Aid made it almost impossible to get a refund by requiring students produce letters of rejection from every scholarship on their search list even though the list included scholarships whose deadlines had passed or for which the students did not qualify. The FTC also charged the defendants with withdrawing money from consumers' checking account without authorization.

To settle these charges, Student Aid and its officers will pay $7,500 in consumer redress. The settlement also prohibits false claims:

• about the likelihood that consumers will obtain scholarship money, or that they will do so with little effort on their part;

• about the past success of the defendants in obtaining college money for consumers;

• that the defendants will provide information about scholarships or grants for which the consumer qualifies;

• about the way in which a consumer's bank account or credit card information will be used; and

• that a consumer automatically will be refunded any money or any other aspect of a refund policy.

Thankfully, according to the FTC, it's easy to spot a fraudulent scholarship service.

• Determine whether it is a company offering a search service or a foundation offering a scholarship.

• Beware of scholarship sponsors who claim to guarantee you a scholarship or who require a large upfront fee. Most scholarship sponsors do not charge upfront fees of more that $5 to $10. No legitimate scholarship sponsor guarantees that you will win an award.

• Understand that scholarship search services do not award scholarships. These companies charge a fee to compare your profile with a database of scholarship opportunities and provide a list of awards for which you may qualify. They do not provide awards directly to applicants, nor do they help you apply for the awards. The information provided by scholarship search services is available at no cost in your local public library or school financial aid office. Crooks charge high fees and provide little scholarship information. The scholarship lists they send students often contain outdated or inapplicable information. A reputable search service or book will usually yield over 50 possible scholarships, not fewer than 20.

• Beware of search services that guarantee you will win a scholarship or a certain amount of financial aid. No search service can control the decisions of the scholarship sponsors.

• Make sure you fully understand the refund policy. If the service promises your money back, read the fine print. Often you will find that you need letters of rejection from all the scholarship listings sent to you to collect. If one of the listings is no longer in existence, it is impossible for you to get a refund. The company may also include all types of financial aid in its guarantee. If they guarantee you $5000 in financial aid or your money back, and you don't get any scholarships through them but you do get a $5000 loan from a bank, you might be disqualified from getting a refund even though the service had nothing to do with the loan at all.

• Get the terms of service from the company in writing. Do not rely on verbal promises.

• Your college financial aid office should be your primary resource for scholarships.

For more information on the settlement with Student Aid, check out the FTC Press Release.

If you would like more information about scholarship scams, the FTC offers a brochure online.

If you would like to ask a question or file a report, please call NCL's National Fraud Information Center at 1-800-876-7060 or use one of our online forms.

NOTE: The agreement between the defendants and the FTC is for settlement purposes only and does not constitute an admission of a law violation.

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