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Government Grant Money Scams

You don't need to join the Federal Grant Association to receive a Federal grant. Fall for this telemarketing scam and you could be out as much as $5000

Wouldn't it be exciting to get a call from the government informing you that you've been approved to receive a Federal grant? I know I could think of a few ways to put that money to good use! If you get a call like this, don't let your excitement overpower your good judgement. This is a well-known telemarketing scam designed to trick you into paying a fee in order to collect a much larger sum in the form of a government grant.

How the Grant Scam Works

Out of the blue, you will receive a call from a person claiming to represent a government "grant association" or a federal "grant association". The caller will offer to help you get a government grant of somewhere in the neighborhood of $5000.00.

You'll be asked to pay a fee for their service. This fee could be any amount but it's usually small enough in relation to the grant so as not to raise suspicion. The will also ask for your bank account number and perhaps your mother's maiden name, and any other information that they can use to bilk you out of your money. Getting personal information out of you over the phone is typical of almost any telemarketing scam. Think twice before you give any out. If the person on the other end of the phone is a crook, you've got big problems.

Don't give out your personal information to just anyone over the phone

Never give your bank account number to someone that calls you out of the blue. Once someone has your account information they can withdraw all of your funds. Giving someone your social security and bank account numbers could also lead to identity theft.

The Federal Grant scammers may even be specific about what government agency they represent. HUD, the Department of Housing and Urban Development, is a well-known agency. People who have actually applied for a government grant from an agency such as HUD may confuse the bogus offer with a real government grant they are seeking.

There are no "charges" for real government grants

The government will never charge you a fee to process a grant, or any other application. Your tax dollars pay for government agencies to exist. An agency would also never require you to provide vital financial information over the phone. Someone claiming they are going to give you money but first they need to charge you a one-time processing fee should raise a lot of red flags. Think before you act.

Some grant scams involve criminals placing ads in newspapers and on websites offering loans for small business. If you respond to one of these bogus government loan offers you will quickly be approved. What comes next should raise more than a few eyebrows. In order to collect your loan you are required to wire funds via Western Union to pay for insurance on the loan. Thousands of dollars may be asked for but the loan could be for much more making it seem reasonable. The trick here is that it's never reasonable for someone to ask for money to insure a loan. If you wire money to someone for loan insurance you can kiss it all goodbye. You won't see a dollar of your loan or your loan insurance money again.

Common Goverment Grant Scam Techniques

Many are tricked, in part, because these government loan scams use real sounding names to fool people. Some of the scams use actual names of well known financial instutions and government agencies. If you go to their website it will probably look very respectable and sophisticated. Designing a legitimate looking website is part of the scheme. If you're sent to a website for more information or to fill out forms it makes many people feel more comfortable with the whole deal. The part that fools people is that the website domains will be just a little bit different than those of the real financial or government websites. Just different enough to trick you. Real government websites usually, but not always, have domains ending in .gov which is difficult to forge. Bear in mind that you can make a link say anything you want. Where that link takes you is another story. When the link says government-loans.gov but once clicked you are taken to government-loans.com you should be on your guard.

Tips for avoiding government grant scams

A real government won't require you to pay an advance fee before you can collect the grant money, because this practice is illegal.
Grants don't arrive unannounced on your doorstep. You won't get a grant without applying for it first.
Don't give out personal information to people making unsolicited calls to you no matter how reasonable they sound. Ask them for their phone number, who they represent, and the address of their organization so you can contact them yourself. Before you do, check them out on the internet or with the Better Business Bureau.
Demand information in writing and have them mail, fax, or email it to you.
If you'd like to apply for a grant, visit www.grants.gov or ask a librarian at your nearist library for a list of Federal grants.
Search for government grants on your own. Begin with the Catalog of Federal Domestic Assistance (CFDA).

Remember: Never give out personal information over the phone when you did not initiate the call.

To report a telemarketing scam, contact your local Attorney General's office and/or file a complaint with the Federal Trade Commission at: www.ftc.gov/ftc/consumer.htm. You can also report fraud to the National Fraud Information Center at 800-876-7060.