How To Spot And Avoid Federal Grant Scams

Being offered free money, especially from the federal government, is exciting. Think of the many ways you can use your "funds" to acquire a home, invest in business, or pay for your bills and college fees. But, watch out. While the government does provide grant funds, there's no such thing as easy money - money that you have not applied for.

Federal grants are awarded to states, city governments, organizations, educational entities or individuals who have applied for funds. There's a grant application form required to process your eligibility. According to the National Procurement Fraud Task Force, the U.S. government awards nearly $450 billion in Federal Assistance Agreements annually, in the form of grants, to help support community development projects and programs, fund research, and promote the arts and social sciences.

However, these federal grant funds are susceptible to various forms of scams. Scam artists have found ways to potentially lure you to part with your hard-earned money, while you will be left nothing in return.

Here's how to detect a potential scam and avoid being victimized:

Over the phone

• Scam artists will call to congratulate you on being eligible for a grant.

• They will request payment such as a processing fee to check your eligibility. Never pay money to apply for a grant.

• They will ask for personal information such as your social security number or banking information. If you have given your account information, call your bank instantly to stop unauthorized access to your account.

• They will assure a "money back guarantee" detailing nearly impossible conditions. Ignore it.

• The "Federal Grants Administration" doesn't exist. If the caller says they are from this agency, don't be fooled.

• Scammers will send you a "list" of grantors you have to contact yourself, instead of providing you with one application.

• If the caller claims you have been awarded a grant, it's a scam. The government never announces grant money over the phone.

Online

The Internet is packed with websites that offer "free grants" ads or any kind of bogus grant information. A federal grant scam site is likely to feature:

• An access fee - where it requires you to pay for a fee in order to qualify for any of the grants available. According to the Better Business Bureau (BBB), if you do qualify, the federal government will never request payment for it.

• A list of real government grants that are expired.

• Grant application forms that have no detailed instructions to assist you.

• No customer service contact information.

• Broken links or links to another scam site.

Whom to contact

If you think you've been contacted by a scammer, or have been scammed, you can file a complaint with the Federal Trade Commission (FTC). You can send a complaint online via their website, or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

FTC inputs scam-related complaints into its Consumer Sentinel database, a free investigative online tool, which grants federal, state or local law enforcement members access to complaints provided directly to FTC by consumers.

FTC also cautions to take control of calls that you are receiving since scam artists are likely to conceal their area code. They might be contacting you from anywhere in the world. FTC advises to register your telephone number on the National Do Not Call Registry if these calls are becoming persistent.

Register online: donotcall.gov.

Register by phone: 1-888-382-1222 (TTY: 1-866-290-4236)

You can also visit the Council of the Inspectors General on Integrity and Efficiency website, where its duties include detecting, investigating, and preventing grant fraud, waste and abuse.

If you are seeking free, authentic information about government grants and other benefits, here's what you need to know about Grants.gov and Benefits.gov.

References:

http://www.grants.gov/web/grants/support/general-support/grant-fraud.html

http://www.grants.gov/documents/19/18249/Grant+Fraud/76cd8f66-7036-475c-9f13-b7a89a00444b

http://www.ftc.gov/about-ftc