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grant scams

As the Economy Sputters, Consumer Complaints About "Free Government Grants" Scams Soar
You've probably heard or seen the advertisements and websites that that claim that they can show you how to tap into hundreds of millions of dollars in grants that the U.S. government "gives" away to individuals each year to help them pay off debts, buy a house or start a business.
Millions of Americans, drowning in debt and desperate for solutions, are falling prey to "free government grant" scams. These companies claim to have "insiders" secrets to finding and obtaining free government grants to pay off debt, buy a home, start a business or just about anything else you'd like to do. They advertise on television, in newspapers, on the Internet and they call people on the phone. They sound believable, look legitimate and may even offer a "money-back guarantee," but all they really do is prey on people desperate for a solution, take their money and leave them empty-handed.
Here are the three most common ways these people and companies operate: 

  1. An advertisement (on television, in print or on the Internet) says that the U.S. Government gives away millions (or billions) of dollars in grants each year to help individuals pay off debt, start a business, buy a house or do any number of other things. All you have to do is buy their book or guide that promises to tell you all the little known secrets to finding and applying for government grants that you don't have to pay back. If you receive anything at all though, it's usually a 'Government Grant Information Guide' (or something similar) that tells you how and where to apply for government grants. But here's the catch - the government doesn't give money to individuals. In any case, the information - as useless as it may be - is usually outdated and provides nothing more than what is already available to the public for free.
  2. A website makes the same promise as above. In order to gain access to the site and the "insider" information though, you have to purchase a subscription to the site or you might be offered a low-cost free trial. Once you've paid the fee, you get access to the site, which doesn't provide information of any use. And worse, the next month a recurring subscription fee starts appearing on your credit card statement (anywhere from $19.99 to $49.99). In order to cancel it, you have to jump through any number of complicated hoops.
  3. You receive a phone call, saying that you have been "approved for a grant from the federal government" in amounts that range from $5,000 to $30,000. They often lie about where they're calling from and like to use official-sounding names, hoping that you'll think that they're calling from a government agency. They usually say that you qualify for a grant because you paid your taxes on time or because you're a woman, a senior citizen, a minority or something similar. Once you're hooked, the telemarketer will move in for the kill and try and get your bank account information so they can deduct a processing fee of $199.00 to $249.00. Of course the grant never materializes, you're out the fee and it's next to impossible to get your money back even though they may have promised you a money back guarantee. A variation of this scam is a "free grants" ad in the classifieds, inviting you to call a toll-free number for more information. Once they get you on the phone, the rest of the scenario is the same.

The Facts:

  1. The government doesn't just give money away to individuals, regardless of your gender, ethnicity, or economic status. Most federal grants go to states, local government agencies, schools or universities and qualified nonprofit organizations, not to individuals.
  2. Every federal grant program is for a specific purpose, has required activities and requires that the recipient account for every dollar. If the specified activities aren't carried out or the money isn't accounted for properly, there are very serious consequences.
  3. Charitable foundations don't just give money away to individuals either. Although a few (not many) foundations will give money to individuals, they have strict eligibility requirements and are usually tied to a highly specific cause or purpose. If you are looking for a list of foundations that do give grants to individuals the best place to look is at the Foundation Center website (www.foundationcenter.org). You can purchase a one-month subscription to their searchable database for a reasonable fee.
  4. All of the "secret" information that these people will promise to give you is available for free at your local library or on the Internet.

What the Federal Trade Commission (FTC) says:  

  1. Don't ever pay any money for a "free" government grant. It’s not free if you have to pay for it. Government agencies would never ask you to pay a processing fee for a grant that you have already been awarded - or to pay for a list of grant-making institutions. The names of agencies and foundations that award grants are available for free at any public library or on the Internet. The only official access point for all federal grant-making agencies is www.grants.gov
  2. Never give your bank account information to someone you do not know. Scammers pressure people to divulge their bank account information so that they can steal the money in the account. Always keep your bank account information confidential. Don't share it unless you are familiar with the company and know why the information is necessary.
  3. Look-alikes aren't the real thing. Just because the caller says he's from the "Federal Grants Administration" or something similar, it doesn't mean that he is. There is no such government agency. Take a moment to check the blue pages in your telephone directory to bear out your hunch - or not.
  4. File a complaint with the FTC. If you think you may have been a victim of a government grant scam, file a complaint with the FTC online on their website (www.ftc.gov) or call 1-877-382-4357.

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