Watch out for government grant scams

Tuesday, October 18, 2011

Consumer Action is warning consumers about a current scam that offers individuals a “government grant” in exchange for an up-front fee. Many consumers have received unsolicited calls promising cash grants if they pay a fee and disclose their bank account information. Often, the swindlers claim that bank data is needed in order to directly deposit the grant into the victim’s account, but once the crooks have the bank account numbers, they can steal all the victims’ money. The swindlers have also requested that money be wired to them. Once the consumer has paid the fee, the swindlers continue to ask for money in the guise that another fee would increase the cash grant.

In another variation, the “company” offers to assist the consumer in obtaining grant money in exchange for allowing it to withdraw funds, as a fee, from the consumer's bank account.

Consumer Action has received complaints about fake grants offered by “Government Grant Office,” or “America’s Grants Department,” among other names. Victims are offered awards ranging from $7,000 to $12,500—all they have to do is pay processing or application fees and taxes. According to the individuals who contacted Consumer Action, they usually got nothing in return for the fees, which ranged from $120 to $400.

“These swindles are a good reminder of why it is unwise to provide ANY personal information during an unsolicited call,” said Joe Ridout, a spokesman for Consumer Action. To be safe, only disclose such data when you initiated the call and are certain that the company is legitimate, he added.

Contrary to the deceptive sales pitch, victims at best may get an “information booklet” with a laundry list of potential grant sources, rather than the actual money that was promised. Many victims received nothing in return for the fees they paid.

Consumers who believe they are victims of this fraud should contact their bank, their state attorney general, and the FTC. The bank should assist them with a “Regulation E form,” which offers protection against fraudulent withdrawals, provided that the unauthorized transfer occurred less than 60 days ago.

The federal government operates a web site, http://www.grants.gov, where you can search for government grants offered by 26 federal agencies. But a legitimate issuer of grants would not contact consumers unsolicited.

Consumer Action offers many free multilingual publications on how to protect yourself from frauds and scams, including Just Say No to Senior Scams.

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Consumer Action, founded in 1971, is a national education and advocacy organization based in San Francisco, CA with offices in Los Angeles and Washington, DC. Its web site address is www.consumer-action.org. Consumers can receive free educational materials from the web site or by sending a self-address, stamped envelope to Consumer Action, 221 Main St., Suite 480, San Francisco, CA 94105.