Grant Scams Promise Relief, Lead to More Headaches

May 22, 2014

Better Business Bureau of Minnesota and North Dakota (BBB) is warning the public about grant scams. Recently BBB received a report from a consumer who stated they were contacted by The Washington D.C. Grant Department about being approved for a $7,000 grant. Contacts like this are not uncommon and such notices are usually accompanied by requests to pay processing fees. BBB reminds people that federal grants are not issued for personal use, but are intended for institutions and non-profits to carry out projects with a public purpose.

“This is a scam that regrettably never goes out of vogue,” said Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota. “And the people who carry it out are good at what they do; they know what to say and how to say it, which is why everyone needs to be careful.”

Usually these grant “notifications” come via the phone, but people may also receive them through mail and email. These notices usually claim to be from the Federal Grants Administration or some other phony - though official-sounding agency. Individuals who receive them are told they’re either eligible for or have been awarded a government grant.

Once the grant has been dangled in front of the unlucky recipients, they’re usually told they need to pay processing fees. In some cases, these fees are requested via prepaid debit cards; in others, people are asked to provide banking or credit card information. However, there are no processing fees for federal grants. Furthermore, no government agency will make phone calls; send email or letters to solicit money or personal banking information from a potential grant recipient.  

To avoid falling for a grant scam, you should:

  • Never pay for a "free" government grant. If you have to pay money to claim anything that’s "free," it isn't free – or, very likely, legitimate.
  • Keep in mind that no government grant-making agency will make phone calls; send email or letters to solicit money or personal banking information from a potential grant recipient.  
  • Be aware there are no processing fees for federal grants.
  • Watch out for communications from official-sounding government agencies – such as the Federal Grant Administration – which don’t exist.
  • Visit to obtain information on federal grants and applications.

The Federal Trade Commission (FTC) says following a few additional rules can keep consumers from losing money to these "government grant" scams:

  • Never give out your bank account information to anyone you don't know. Scammers pressure people to divulge their bank account information so that they can steal funds. Always keep your bank account information confidential.
  • Be aware a real government agency won't ask you 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 official access point for all federal grant-making agencies is
  • Remember that phone numbers can deceive. Some con artists use Internet technology to disguise their area code in caller ID systems. Although it may look like they're calling from Washington, DC, they could be calling from anywhere in the world.
  • Take control of the calls you receive. If you want to reduce the number of telemarketing calls you receive, place your telephone number on the National Do Not Call Registry. To register online, visit To register by phone, call 1-888-382-1222 (TTY: 1-866-290-4236) from the phone number you wish to register.
  • 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, or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

If you have provided personal banking information to anyone claiming to be associated with a federal grant agency, call your bank immediately to prevent unauthorized access to your account.

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