Being a college students leaves you vulnerable to many types of fraud. Fraud can and does happen to age groups and social status categories, however. One would think college students are too smart to become victims of fraudulent schemes, but even the savviest of people aren’t immune to the risks out there. Why are college students targeted? Because they are fresh off high school, eager to experience new things, embracing their newfound independence with a get-rich-quick mentality after being under their parents’ thumb up until now.
Follow these tips so you don’t fall victim to stock fraud, financial aid schemes and more. Here are some common fraud types geared toward college students.
Scholarships and Financial Aid
The statistics are sobering: consumers lose $100 million each year to financial aid fraudsters, according to FinAid as reported on Money Crashers. Here are some things to be on the lookout for:
- Scholarship awards: Have you received a phone call saying you are the lucky recipient of a scholarship? Don’t jump the gun too quickly; take it with a grain of salt. Even though the person my claim to be from the U.S. Department of Education, this is easy to fake. They may offer you a college scholarship or grant to attend the school of your choice, which sounds nice on the surface but listen further. Are they asking for a bank account number they can use to withdraw the “small” processing fee for the grant that will cover all of your student loans? Hang up. The Department of Education never replaces loans with grants, and it never charges a processing fee for any scholarships or grants they do award.
- Phony websites: If you’re looking to apply for financial aid, there is a reputable website at which to do so: ed.gov. It’s free and easy, which is great for you! However, fake websites claiming to be FAFSA are out there on the prowl and they do charge an application fee. Not only do the forms look official, they contain industry terms like foundation, federal, national and association. Problem is, they’re not legit and they take money from unsuspecting students and their parents. Don’t ever pay a fee to apply for financial aid.
- “Free” seminars: If you and your parents have been invited to a free seminar featuring lectures and a presentation on how hard it is to get financial aid for college, be wary. You may be pitched services for a fee that “guarantees” students access to financial aid. Because this type of fraud plays on the fears of students and their families who are worried about affording the cost of college, too many people fall for this one. Don’t be the next one. Financial aid is guaranteed to no one.
If you started college already, you may be working a couple jobs just to pay your bills and tuition. You are in an especially vulnerable place if approached by a broker who’s a friend of a friend promising big returns on a stock that will soon be exploding on the scene. It’s hard to resist the temptation thrown at you by friends telling you you’ll miss the boat on this huge opportunity if you don’t jump at it.
Raise the red flag: buying stocks in a rush based on flimsy promises from someone you don’t really know is never a good idea. Fraudulent brokers see you’re a poor college student new to living on your own. It’s quite easy for them to convince you to fork over what little savings you do have in order to get in on this “deal of a lifetime.” Problem is, there is no stock, there is no deal, and you’re left holding the bag. Consult with a securities attorney if you suspect you have been duped.