Government Grant Scam Steams On

November 2, 2004
New versions of a tired but effective scam are making the rounds. It's the "government grants" scam in which recipients of phone calls are promised government grants in return for a one-time "processing fee."

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The scam occurs when an unsuspecting consumer gives out personal bank account information that enables the allegedly fraudulent company to take money - between $199 and $249 - out of a consumer's account.

"Losing hundreds of dollars can be a devastating financial blow to many consumers and seniors who live on fixed incomes," Illinois Attorney General Lisa Madigan said. "If you receive a call like this, just hang up the phone. Never, ever give out financial or bank account information to someone you don't know and trust."

Madigan said her Consumer Protection Division has received several recent complaints about unsolicited calls which offer to obtain government grants for consumers in exchange for "processing" fees that reportedly range from $199 to $249.

"I am $249.00 poorer and without no grant money or answers," said Lori of Midland TX, one of hundreds of consumers who have complained to ConsumerAffairs.com about the myriad of "free money" scams.

The scam depends on a consumer's willingness to reveal routing information found at the bottom of personal checks. This information allows the scam artist to use desktop software to create what looks like an actual check from the consumer's checking account and debit the so-called processing fees without the consumer's signature.

"He said that in order to insure that the grant money was received by me and did not get into the wrong hands he would need my bank account number," said Gena of Montgomery AL in her complaint to ConsumerAffairs.com.

Madigan also warned of a variation of the grant scheme in which consumers are told they have been awarded a government grant and need to pay a fee to collect the grant money. This also is a scam, she said.

Madigan reminded consumers that a wealth of information about government grants is readily available online or at local libraries. In addition, Madigan said grants typically are not awarded for personal use.

"Some consumers told us the caller said the grant can be used to pay off credit cards or personal loans with no questions asked. That's simply not true," Madigan said.

She added that consumers who were victimized by the scam should immediately contact their banks to request a stop payment or credit for the amount.

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