As a part of the FTC's "Project $cholar$cam," a federal court has issued an order temporarily halting the activities of two Florida based scholarship search service companies. Bogus search services obtain lists of high school and college students and mail postcards or call millions of parents with claims of access to "billions of dollars" in scholarship funds. Scams typically guarantee specific amounts of money in return for large up-front fees, but few if any consumers receive scholarships.
According to law enforcement officials, National Scholarship Foundation and National Grant Foundation telephoned and sent solicitations to students all across the country guaranteeing at least $1000 in scholarships or grants if the students paid up-front fees of $179 or $189. The FTC alleges that the companies did not have access to funds as they claimed but instead provided lists of scholarships. The FTC characterized the lists as "of no use to consumers because the scholarships and grants have expired, contain sources that are nonexistent, or have conditions that cannot be met." Both companies also claimed to be non-profit, in an attempt to add credibility to their claims. The FTC charges that the defendants actually kept the money for personal use.
In the National Scholarship Foundation case, the FTC has also named the National Business Reporting Bureau (NBRB) as a defendant. The complaint alleges that when consumers wished to check on the validity of NSF's claims, they were told that the company was approved by NBRB, a supposedly independent, third-party, reporting organization. In fact, NBRB is owned and controlled by the same individuals as NSF, according to the FTC.
The FTC once again warned that "a guarantee of scholarship money is a clue to fraud." Consumers should "be wary of claims that a search service will do all the work, that it has special access to scholarship information, or that millions of dollars worth of unclaimed scholarship money is available to the first in line."
For more information about these cases or for a complete list of defendants, check out the FTC Press Release.
Copies of the FTC's Scholarship Scam Tips are available on their website.
NFIC also has tips for telemarketing or online scholarship scams.
If you have any questions or would like to report an incident, please call NCL's National Fraud Information Center at 1-800-876-7060 or use one of our online forms.
NOTE: The Federal Trade Commission authorizes the filing of a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or a ruling that the defendant has actually violated the law. The case will be decided by the court.
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