Government grant scams

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How to Recognize and Avoid Grant Scams

If an individual contacts you about an opportunity to obtain free money in the form of a grant from the federal government, be extremely wary. You are likely being targeted as part of a scam. Any of the following statements should put you on high alert:

  • "Great news! You are eligible to receive a government grant."  The government does not contact individuals to award grants for which there has been no application. An individual who makes this claim is not from the government and could be trying to collect private personal data from you, such as your Social Security number, bank account number or other such information.
  • "For a small fee, you can obtain a government grant."  The government does not charge a fee for individuals or entities applying for a federal grant. While financial information may be required as part of the application process, it should be submitted through a government website, such as Grants.gov, and there should never be a cost to you.
  • "The Federal Bureau of Grant Awards has awarded you a grant."  Beware of individuals claiming to work for grants-related government bureaus and departments that do not actually exist. The individual may even provide a valid address for a government office, adding a touch of realism to their claim, but do not be fooled.
  • "Our office is located in Washington, D.C."  Current technology can fool caller ID systems into reporting that a caller is phoning from Washington, D.C. In fact, a scam artist could be calling from anywhere in the world. Similar tactics can be used with email addresses in online communication, so be alert!
  • "This type of federal grant does not require an application."  Every grant from the federal government involves an application submitted through a government website, such as Grants.gov. Also, you cannot apply for federal grants over the phone or via email. Any individual claiming that a grant does not require an application, or requires only a phone call or an email, is attempting to scam you.
  • "You won the government grant in a drawing."  The government does not award grants based on a drawing or raffle; an individual or entity must first apply for the grant through a federal website, like Grants.gov. Any individual who claims the government is awarding a grant, for example, to a lucky group of citizens who have paid their taxes on time is attempting to scam you.
  • "You have been awarded a federal grant that you can spend any way you like."  Federal grants are usually awarded for specific programs, research or projects – most often to local governments, organizations, institutions and universities. Beware of any individual who promises a government award that can be spent on paying down tuition or credit card debt, or home electronics and decor.

Warning Signs

  • Someone claiming to be a government official contacts you out of the blue to tell you that you’re eligible for a grant. The federal Grants.gov website states that the government only contacts people about grants if they’ve filed an application.
  • A caller wants you to pay a fee in order to receive a grant. There is never any charge to apply for a federal grant. 
  • A caller tells you that you’re eligible for a personal grant that you can spend any way you choose.
  • According to Grants.gov, federal grants usually go to universities and other institutions for specific programs, projects or research.
What to do:

  1. Do be wary of magazine or newspaper classified ads that tout “free grants” and provide a toll-free number to call. The Federal Trade Commission (FTC) warns that some scam artists use such ads to entice potential victims.
  2. Do unfriend and block any social media user who sends you an unsolicited message about a government grant, and report it to the social media platform. Even if the message appears to come from someone you know, the Better Business Bureau notes, that person’s account may have been hacked or their profile cloned.
  3. If you live in an area that’s been hit by a natural disaster, do watch out for scammers who claim to represent the Federal Emergency Management Agency (FEMA) or the Small Business Administration (SBA). FEMA says actual government workers wear ID badges and will never ask a disaster victim to pay a fee for federal aid. 
What NOT to do:

  1. Don’t assume a Washington, D.C., number on your caller ID means a grant offer is on the level. Scammers use technological trickery to hide their actual location, which could be anywhere in the world.
  2. Don’t believe callers who claim they’re from an official-sounding government agency with news about a grant who claims you can apply for the grant over the phone. Check out the name of the agency online or in the phone book—it may be fake.  Legitimate government grant programs require you to fill out and submit an application.
  3. Don’t give your Social Security number or banking information over the phone to anyone you don’t know. 
  4. Don’t pay a fee to a company that says it will help you find grants. You can get information about government grants for free at public libraries and online at Grants.gov. Government agencies don’t charge processing fees for grants they’ve awarded. 
  5. Don’t respond to letters or emails about unclaimed property that request fees or personal information. If you receive information about unclaimed property in your name, check it with your state property agency. You can also search the free "Missing Money" database maintained by the National Association of Unclaimed Property Administrators.
  6. Don’t give your bank account information to anyone you don’t know.