March 13, 2009, Newsletter Issue #158: Beware of This Real Life Scholarship Scam

Tip of the Week

If you get a telephone call from someone claiming to represent the United States Department of Education offering to replace your existing student loans with grant money, and then requesting your bank account number for the processing fee, you are being contacted by someone attempting to commit financial aid fraud. Calls like this are actually being made, and people have been defrauded as a result of providing banking information.

There are several warning signs that this is a fraudulent request. First, there is no U.S. Department of Education program that involves replacing student loans with grants. Remember that is an offer seems to good to be true, it usually isnít true! Second, the U.S. Department of Education does not charge any type of processing fee for grants. Third, no matter who is on the other end of the phone, you should never give out banking information over the phone to anyone who calls you.

If you have given out banking information under such circumstances, notify your bank immediately and request that your account be monitored very closely. To protect yourself against theft, do not ever give out financial information over the phone unless you are the one who initiates the call and it is to a trusted source.

This scam is fraudulent on many levels. Impersonating a federal officer, which is what anyone who falsely claims to represent the U.S. Department of Education is doing, is a crime. Therefore, you should notify the police if you receive such a call. Since this particular scam references federal education dollars, the fraudulent activity should be reported to the Department of Education at 800-MIS-USED . Additionally, the attempted fraud should be reported to the Federal Trade Commission online or by calling 877-FTC-HELP.

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