Avoiding Grant Scams
The very idea of all of the advertisements that let you know that they have free grants to offer might sound too good to be true, and the fact is that in some ways they are. The ads claim that you will surely qualify to receive a grant for your business. They say that your application is guaranteed to be accepted, and that you will never have to pay the money back.
Obviously, there is a catch that they don’t mention. The Federal Trade Commission (FTC), the nation's consumer protection agency, warns you that money for nothing grant offers are quite often scams: the grant isn't free, isn't guaranteed, and very often, it might not even be available to you.
Some people actually market free grants in classified ads, which start off by inviting consumers to call a toll-free number. If you do call, then a representative of the company will ask you some basic questions in order to determine if you qualify to receive a grant, and some of these questions tend to include:
1. What is your address?
2. How long have you lived at this address?
3. Do you have a bank account?
4. Do you have at least $200 in your account at this time?
Then, you will probably be asked to hold on the line while your eligibility is determined. After the operator congratulates you on your eligibility, she or he will ask you to pay a one-time processing fee that can range from anywhere from $100 to $300.
If you question this fee, then you will be reassured that that the grant is guaranteed, and that if you aren’t absolutely satisfied with your grant, you'll get a complete refund. Nonetheless, she won't offer to tell you what the conditions for a refund are.
The processing fee is said to cover finding a grant source and sending you the appropriate application package by mail. Nevertheless, you will not receive an application or a source. What you will get is a list of agencies and foundations to which you will have to write and request an application. This information is in fact already available for free at any public library or on the Internet.
Most sources of grant money don't award grants to individuals for personal need. Grants are usually awarded in order to serve a community’s welfare, such as bringing new jobs to an area, training young people, preserving a bit of history, funding soup kitchens or art museums, or researching some medical issues.
If you enquire at an agency or foundation for money for personal reasons, you probably won’t get it, even if you are financially in the need. You might also not be likely to get a refund from the grant broker due to the conditions for a refund being nearly impossible to meet: you usually have to apply and be denied by each person on the list within 90 days.
If you're considering applying for a business grant therefore, you will need to bear in mind that the applications are available to you for free and that anyone who guarantees you a grant is quite likely to be interested in their own gain, and definitely not in yours. If you think that you might have been a victim of a grant scam, try to file a complaint with the FTC.
The FTC functions for the consumer to be able to prevent fraud, deceptive and unfair business practices in the marketplace and to provide you with information that will help you see, stop, and avoid them.
If you would like to file a complaint or to get some free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.
The FTC will participate against Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database which will be available to hundreds of civil and criminal law enforcement agencies in the U.S. as well as abroad.
More information on the next page: Grant Application Tips