BBB Warns Students about Credit Cards, Financial Aid Fraud
RICHMOND,
Va. - The Better Business Bureau (BBB) warned college-bound students
and their parents to be careful in using student credit cards.
"In my day, college students carried cash. Now, they buy with plastic.
Debt can mount up very quickly," said Tom Gallagher, president &
CEO of the BBB of Central Virginia.
Gallagher
said many parents approve of their college students carrying their own
credit card. They want to teach their kids how to manage finances.
Besides, the parents contend that a credit card helps students build a
sound credit history, which is important.
On the other hand, that credit history could be in peril if the bill isn't paid on time, Gallagher said.
The
students must exercise responsibility, and parents should monitor the
spending to make sure it does not get out of hand, Gallagher said. With
most college student credit cards, the parents can set the credit
limit. The parents should also make sure that the debt is paid off in a
timely fashion.
College student credit cards often offer lower
rates to those students who make good grades. Many of the cards have no
annual fees.
Financial Aid Fraud
Gallagher
said parents should also be wary of companies that promise big bucks
for college tuition. They ultimately take your money and leave you with
nothing," he said.
Last year, consumer complaints about scholarship, loan and grant services rose by more than 60 percent nationwide.
Parents
from New York to California have contacted the BBB to report that they
paid a Utah-based company as much as $1,000 to find financial aid for
their child and never heard from the company again.
Parents
said that their college-bound child received an email from College
Money Matters that he or she had been accepted to attend a free
financial aid seminar. The seminar turned out to be nothing more than a
sales pitch, luring the student to pay for a financial aid search.
Other
parents and their children got emails offering "Free Grant Money." When
victims received the grant in the form of a check, they were instructed
to deposit the check and then wire a smaller amount of money back to
cover processing fees. Because checks looked professional, it often
took several weeks for banks to discover they were counterfeit. Not
only did victims have to pay the banks back for money they withdrew on
the counterfeit checks, they were also out the money they had wired to
the scammers.
Gallagher sad parents and their students should be wary of these lines:
•
"The scholarship is guaranteed or your money back." In reality no one
can guarantee that they will get you a grant or scholarship. And the
refund guarantees that are offered usually have so many conditions or
strings attached that it is almost impossible for consumers to get
their money back. • "You cannot get this information anywhere else."
Actually, scholarship information is widely available in books, from
libraries and financial aid offices and on the Internet, if you are
willing to search for it. • "We will do all the work." Only parents and
students can really determine and provide the financial information
needed to complete the forms. • "You have been selected by a national
foundation to receive a scholarship." If you have not entered a
competition sponsored by the foundation, this claim is highly unlikely.
• "May I have your credit card or bank account number to hold this
scholarship?" This is never a requirement for a legitimate scholarship
offer. • "The scholarship will cost some money." Legitimate scholarship
offers never require payment of any kind.
Victims of financial aid fraud in central Virginia should contact the Better Business Bureau at 804-648-0016.
The
BBB serves Richmond and Tri-Cities, as well as 42 surrounding counties,
from Fauquier to Mecklenburg and Northumberland to Amherst. The
nonprofit organization was established in 1954 to advance responsible,
honest and ethical business practices and to promote customer
confidence through self-regulation of business. Core services of the
BBB include business reliability reports, dispute resolution, truth-in
advertising, consumer and business education and charity review.