Scams and Deceptive Practices

Outcomes

Financing your college education can be difficult and confusing, and there are people who try to take advantage of students and prospective students. In this section, we will learn about some of the most common scams and deceptive practices and how you can avoid them:

How to identify a scam
Be wary of organizations that try to make you pay for their services
What to do if you accidentally fall for a scam

Click to View Video Transcript

For just a small fee, you can go to college for free! Does it sound too good to be true? Well, it probably is… Unfortunately, there are a lot of people out there who are looking to take advantage of students who are looking for scholarships, who are trying to fill out the FAFSA or WASFA, and who are trying to repay loans, to name a few things.

Guaranteeing you a lower loan payment or debt forgiveness
Promising that you will qualify for a program
Charging you for a form or transaction
Charging you to consolidate your loans
Asking you for your loan login information
Putting pressure on you to make a decision immediately or telling you that an offer is only available for a period of time

Scams often try to put pressure on you to act fast. If you are suspicious, make sure to:

Take a step back and reflect on the situation
Research the company to see if it seems legitimate or if there are reports of scams
Talk it over with friends and family to get a second opinion

There is a lot of free help out there! Take a look through this module to learn how to protect yourself from scams and what to do if you accidentally fall for one!

Key Terms

Scam: a fraudulent business that tries to collect money or personal information without providing the promised good or services

I think I fell for a scam. What should I do?

If you fell for a scam, here are some things you can do to protect your money and your identity:

Contact your bank or credit union and let them know if you gave away your account information or debit card number
Contact your credit card company to report fraud if you used a credit card
Contact ED if you gave away your FSA ID information and they can help you change your username and password
Make a complaint to:

If it sounds too good to be true, it probably is

You should proceed with caution if any of the following is true:

You are offered something that is hard to believe;
You are asked to pay for something that should be free (such as scholarship opportunities); or
You are asked to provide more personal information than is necessary.

You should never have to pay for scholarships, grants, loans, or anything related to the FAFSA or WASFA.

Common signs of student scams include:

Guaranteeing you a lower loan payment
Guaranteeing you that your debt will be forgiven
Promising that you will qualify for a program (without any information from you)
Charging you for a form
Charging you for a transaction
Charging you to consolidate your loans (this should always be free though approved servicers)
Asking you for your FSA ID information (username and password)
Putting pressure on you to make a decision immediately or telling you that an offer is only available for a period of time

The Federal Trade Commission (FTC) suggests the following 10 tips for avoiding scams:

Be wary of unexpected requests for money that seem to be coming from a trusted source (family, government, etc.)
Search the company online with a keyword like “scam” to see if other people have reported a problem
Don’t trust the caller ID on your phone (you can always call back a number that you know is correct to double-check information)
Don’t pay for anything until the service has been provided
Be wary of requests to pay for something by wiring money (credit cards are a better option because they have built-in fraud protection)
It is always a good idea to slow down, think about the situation, and talk to someone you trust before making any decision
Hang up on robocalls
Be skeptical of free trials
Don’t deposit a check and wire money back (if the check is a fake, you will need to pay back the bank)
Sign up for free scam alerts from the FTC

#1. There is usually free help from your loan servicer, financial aid office, and other loan advocate organizations – be wary of organizations that try to make you pay for their services

True

False

The correct answer is True: There is usually free help from your loan servicer, financial aid office, and other loan advocate organizations – be wary of organizations that try to make you pay for their services.

#2. If you think you fell for a scam, you should notify the Federal Trade Commission and make sure you secure any accounts that may be compromised.

True

False

The correct answer is True: You should notify the FTC and secure your accounts

Finish

Results

Nicely done! It looks like you really understand this module!

If you are still a little confused, you may want to review this module.