How to Identify Scholarship Scams
It's sad, but true: many thieves are out there looking to profit from those who are seeking money for education. They know you're searching for scholarships and willing to do whatever is necessary to obtain the money you need. This leaves the door wide open for people to create scholarship scams that steal from you and make a profit for those who have no interest in helping students.
The flow of money
The first key to recognizing scholarship scams is to remember that the money flows to the student, not the other way around. Reputable scholarships are free to apply for and don't require any output of money from you--nor should they. If you come across a scholarship that charges you to apply, it's likely a scam. If you avoid such monetary situations you can avoid a majority of scams on the market.
Exclusivity and guarantees
Another way thieves try to trick you is by offering "exclusive" scholarships you can't find anywhere else. These lists aren't exclusive and are probably things you can find on your own. In addition, these "programs" might offer you guarantees of finding scholarship money. There are no guarantees when it comes to scholarships and no company can make such claims. This is a clue that the company is running a scam to take your money.
Guard your personal information
It's difficult to find the balance between giving out too much information and not enough. Because of the way scholarships are designed, you often give out information that is key for identity theft. You quickly see what standard information is required and if a scholarship application is asking for more details such as bank account numbers, social security numbers and the answers to security questions, it could be a scam. You should be careful of giving anything beyond what your FAFSA application would offer to the scholarship company.
Awards you never applied for
Similar to lottery scams, when receiving award letters from a place where you never applied, you should be wary. Occasionally these can be real, but you need to verify before providing any information, as it might be a trap to just acquire personal information that could trigger identity theft and financial fraud.
"Free" seminars with an upsell
Finally, be wary of free seminars claiming to know how to get you scholarship money. Some of these seminars can be real, but if there seems to be some sort of "upsell" component where you must give them money for information, it may not be a reliable source.
The basic approach for avoiding all these scams is to use common sense and be inquisitive. When you ask questions, you can usually find the holes in a scam and avoid being fooled. Remember, money should be coming to you instead of you should dishing it out.