BBB Warns Consumers to Be Wary of ‘Free Grants’

August 04, 2008
 Who can resist an ad like this:
 “FREE GOVERNMENT Grants/Programs. Never repay! Available for housing purchase/repairs, business, education, medical/personal bills. No credit checks.”
 Jennifer and Joel Moore of Estes Park sure couldn’t. Joel is headed to culinary school in Boulder and the couple were intrigued by the idea of a grant to help cover the expense.
 Jennifer called a number she saw in a classified ad newspaper for Federal Grant Network. Not only could she get a grant to cover education, she learned, but also her home and business. All she needed to do was authorize the company to deduct $99 from her checking account and then customer service would provide the couple with names of grants for which they could fill out applications.
 She was not 100 percent sold on the idea and discussed it with her dad, who suggested she check them out with the Better Business Bureau.
 Jennifer said she’s glad she did and now wants others to be wary of falling for similar “free grants” scams.
 By the number of calls coming into the Better Business Bureau -- in Northern Colorado and nationwide -- the numbers of people taken in by this ruse is high. In almost every case the claim is the same: Your application for a grant is guaranteed to be accepted, and you’ll never have to pay the money back.
  Grant scammers generally follow a script: They congratulate you on your eligibility, then ask for your checking account information so they can “deposit your grant directly into your account,” or cover a one-time “processing fee” ranging from $20 to more than $100. The caller may even reassure you that you can get a refund if you’re not satisfied. In actuality, you’ll never see the grant they promise; they will simply disappear with your money.
  Your BBB and the Federal Trade Commission note that a few basic rules can keep you from losing money to “government grant” scams:
  • 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.
  • Don’t pay any money for a “free” government grant. The only official access point for all federal grant-making agencies is A real government agency won’t 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.
  • 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.