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FTC warns of scholarship scams

From U-Wire
Arizona Daily Wildcat,
January 8, 2000
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AUSTIN, Texas-Following a sweep of the Internet last week, the Federal Trade Commission urged parents and students to be more aware of scholarship scams circulating on various Web sites.

The FTC, which oversees commerce and investigates unfair or deceptive acts, searched 600 Web sites and sent out letters to 37 Internet scholarship services that may be in violation of FTC regulations.

Some of the 37 companies promise students a specific amount of scholarship money, and others claim to be the only source of information for particular scholarships, said Mitch Katz, an FTC senior public affairs specialist.

The letters warned the companies that they may be in violation of FTC regulations and could face legal action if they continue to make unsubstantiated claims in the future.

"Here, we wanted to get the word out that there are guidelines for advertisers and certain things you can't do," Katz said.

Currently, no formal complaints have been brought against any of the companies, but past sweeps have led to criminal charges.

The FTC hopes the companies will comply with regulations without legal action, Katz said.

"We're trying to stop this behavior before it becomes a problem," he said.

Katz said misleading claims made by scholarship search companies have become a significant problem because parents of college-bound students have begun to look to the Internet for ways to cover the increasing costs of college.

"They're looking for scholarships, and some of these less reputable organizations are preying on that," Katz said.

Students entering college are the most susceptible to scholarship scams, said Jack Joyce, director of guidance services at the College Board, a non-profit educational association which offers an online scholarship database.

"They're not familiar with a lot of the terminology and not as familiar with the resources available to them," Joyce said, adding that students need to evaluate the claims made by Internet sites.

"If it sounds too good to be true, it probably is too good to be true, and you need to step back and look at it very carefully," Joyce said.

Joyce recommended that students use familiar Web sites and agencies and know which are legitimate scholarship searches.

Students should be skeptical about companies that give only P.O. Box addresses and should also be wary if the scholarship application requires handling fees, said Carrie Hurt, vice president of communications for the Austin Better Business Bureau.

"It's real important to do your homework on the company first," Hurt said.

If students are suspicious of claims made by a company, Hurt said they should contact the Better Business Bureau where the company is located.

Henry Urick, an assistant director at the UT Office of Student Financial Services, said with free Internet scholarship search services available, there isn't any need to pay for those services.

"Don't send money, period," Urick said. "There are better ways the money could be spent."

Student Financial Services sent out a letter last week to accepted students and those still applying to the university about applying for financial aid and also warning students about scholarship scams.

Student Financial Services offers a Web page with links to reputable scholarship searches and financial aid pages, Urick said.


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