Frosh Finance: Avoiding Scams
Unfortunately, scammers, fraud artists, and greedy people like to target college students. As newly-minted adults experiencing newfound independence, college students are especially vulnerable to deceptive acts that can result in financial losses and/or identity theft. A little bit of coaching and preparation can go a long way in helping your student avoid these traps.
Scholarship Scams: False Promises of Financial Aid
Because students feel the pressure of high college costs, they are often on the lookout for ways to lessen the blow. Often, this takes the form of false promises of financial aid and scholarships. Some common scams that students should avoid like the plague include:
Guarantees of scholarships or aid without application or with very minimal information required (no grades, no essays etc.). It is possible that scholarship awards (likely few, and in small amounts) might be given as a result of these programs, but the “winners” are selected by chance and the real purpose of the program is to collect personal data to then resell or use for other purposes.
Scholarship competitions or offers that require upfront fees to apply or to receive funds. These are just never legit. Period. And there is little recourse for students who fall victim.
Unsolicited offers for scholarships or grants. These run the same risks as the two examples above. It is highly unlikely that they are legitimate offers, and students should thoroughly investigate before engaging.
Remember, if it sounds too good to be true, it is. The best place for your student to look for scholarships is through the financial aid office and scholarship hub run by the university they attend.
Phishing Scams: The Digital Deception
Phishing scams are pervasive and college students are among the most targeted. According to the FBI’s Internet Crime Report issued in 2020, phishing was the most common type of cybercrime, with 241,342 reported incidents.
“Phishing” refers to scammers sending emails or text members that appear to be from legitimate sources, such as the university financial aid office, a financial institution, or other trusted companies and organizations. Some of these phishing attempts are error-laden and contain red flags, but they are getting more and more sophisticated and many are VERY slick and convincing. These messages often contain urgent requests for personal information or login credentials and often ask the recipient to click on a link to complete the requested task. In fact, the email sender has no connection to the trusted organization and is simply stealing information and trying to gain access to accounts.
Students can protect themselves by adopting the following habits and practices:
If they receive an email asking for action(clicking links, providing information, etc.) - that’s a caution flag. They should contact the company / business / organization directly, using the contact information they have (not the contact information or link in the email). For example, if the student receives an email purportedly from their bank, they should pull out their debit card and call the number on the back of the card, or log into their account directly and find the contact information there. They can then tell the bank they received an email and wanted to ensure legitimacy.
Make sure they understand that financial institutions and banks and reputable businesses will never contact them and ask for private account information (and most state this on their websites).
Two-factor authentication takes about 5 extra seconds and can save hours and hours of headache – encourage students to set this up wherever possible.
Job Scams: Too Good to Be True
Parents probably get these messages too - text messages and emails telling you that someone has reviewed your resume and would love to hire you. Sound familiar? Your student will likely start getting these as well.
The gist of these scams is that those reaching out offer well-paying job opportunities that are flexible and allow work-from-home etc., but once the details start emerging it starts to look too good to be true (and . . . it is!). These job offers may require payment for training or certification or require the submission of personal banking information early in the application process. These are GIANT RED FLAGS. 🚩🚩 🚩🚩 🚩🚩 Reputable employers never require payment to apply.
If your student is interested in a part-time job, the best place to start is with the university website job posting page. Our blog post on part-time jobs provides helpful guidance.
Credit Card Scams: The Debt Trap
A recent study by Sallie Mae reported that 57% of college students have at least one credit card, making them attractive targets for credit card scams as well as credit card offers that aren’t quite scams but can be financially treacherous. Some hallmarks of these offers include:
high-pressure tactics (limited time offer! must decide now!)
unrealistic credit terms
promises of instant approval regardless of credit history
These credit cards usually come with high fees and high interest, and students can quickly find themselves underwater. Parents can (and should) encourage their students to use credit carefully and responsibly and to read the fine print on all credit offers.
If Your Student is a Victim
If your student has been a victim of a financial scam, remember that they are not alone. Those perpetrating the scams are sophisticated and clever, and you can reassure your student that they aren’t the first and won’t be the last to fall victim. Some avenues your student can pursue follow:
The first step should be contacting their state’s Attorney General’s Office. Most AGs have a Consumer Protection Division that will take the complaint and often contact the company / perpetrator on behalf of the victim. This is a great starting point. Remember to contact the AG’s Office in the state where the contact occurred – likely at the student’s college.
The local Better Business Bureau is also a good resource.
Education is powerful – conversations with your student about these ploys can help avoid hassle and headache.