Monday, May 28, 2001

Scholarship search can perpetuate scams




By Ben L. Kaufman
The Cincinnati Enquirer

        As surely as letters arrive from college admissions offices every spring, so do offers from scholarship search services. Some make money-back promises, take advance fees and vanish.

        That's what Amy Storer experienced last year as a Miami University freshman.

PITCHES WITH CATCHES
  Ohio Attorney General Betty Montgomery identified these sales pitches as warning signs that a scholarship search service might not be legitimate:
  • The scholarship is guaranteed or your money back. “No one can guarantee that they'll get you a scholarship. Get refund policies in writing before you pay.”
  • You can't get this information anywhere else.“There are many free lists of scholarships available. Check with a school guidance counselor, library or Internet.”
  • All I need is a credit card or bank account number to hold this scholarship. “Don't give out your number over the phone without getting information in writing first. It may just be a way to gain access to your money.”
  • We do all the work. “There is no easy way to apply for scholarships. You must apply for scholarships or grants yourself.”
        Her Harrison family had paid $850 to a search firm called YES, but promised aid didn't materialize and her demand for a refund went unanswered.

        Other services charge for and provide information that families could obtain with little effort and no cost, according to Ohio Attorney General Betty Montgomery.

        “These companies use official sounding names and make offers that are hard to refuse,” Ms. Montgomery said. “Information about scholarships is available from a variety of sources at no cost. If people are resourceful, they can do the research themselves with out losing hard-earned money to scam artists.”

        Whether any search company fulfills its promise is unclear because authorities and the Better Business Bu reau hear only queries and complaints. In the same way, no one knows how many families don't complain when scholarships fail to materialize.

        One Ohio family lost $12,000 in advance fees before calling Ms. Montgomery's office.

        That's an extreme case.

        Most families spend $750 to $850, her spokeswoman, Stephanie Beougher, said, and few fees have been recouped when scholarships failed to arrive.

        “They're promising the world,” Ms. Beougher said of many telemarketers, direct-mail solicitations and seminars selling scholarship search services.

        In the past eight years for which she had accessible records, Ms. Beougher found 126 complaints.

        For instance, Gary and Barbara Storer of Harrison paid $850 to YES, of Castroville, Texas, in June 1999.

        Their contract said, “The student should receive a minimum of $2,500 in assistance while he or she is enrolled in college. Assistance consists of grants, scholarships, and loan interest paid by the government.”

        Four months later, Mrs. Storer asked YES where Amy's materials were. In February 2000, YES responded that the planner was shipped two months after the Storers signed the contract but Amy hadn't returned required forms.

        That's when they contacted Ms. Montgomery.

        The few companies that responded to Ms. Montgomery's queries repaid about $4,500 dur ing the past eight years, Ms. Beougher said.

        Ms. Beougher said complaints in the past eight years peaked in 1999 with 42. Last year, it was 13 and this year, six. Cincinnati's Better Business Bureau reported a similar peak and decline in complaints and queries about scholarship search firms.

        Officials said the easiest way to avoid being scammed is to contact the BBB, the Federal Trade Commission or Ohio Attorney General's office before paying a scholarship search firm.

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