Beware Latest Government Grant Scams — Warning Signs and How To Protect Yourself

·4 min read
Kang Iwan / iStock.com
Kang Iwan / iStock.com

Free money always comes at a cost. Many are now learning this the hard way, as scammers are increasingly trying to trick potential victims with offers of fraudulent government grants.

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Not only are the grants not real, but when unknowing consumers opt in, they are robbed of thousands of dollars. The increased activity and growing savvy of scammers has watchdogs issuing warnings to be on the lookout for such messages.

The latest activity comes at a time when inflation has wreaked havoc on many households, and scam artists are preying on vulnerable populations — particularly seniors — with messages that can be mistaken for a relative or friend offering helpful advice.

Generally, it will come in the form of a text or social media message mirroring the profile or phone number of someone the person actually knows. The message will inform the recipient that the government is offering grants of $50,000 or more to help with the economic pressures caused by COVID.

If the person responds, they’ll be informed there is an application process that requires purchasing gift cards or depositing money before the lump sum grant is processed. Of course, there is no grant and the scammer on the other end is walking away with hundreds, if not thousands, of dollars. According to the AARP Fraud Watch Network, who spoke with the Detroit Free Press regarding the scams, one person lost up to $10,000.

Per a recent report by the Better Business Bureau, 44% of Americans have been approached with a government impostor scam, and 77% of people surveyed were familiar with the practice. Since 2014, con artists pretending to be government agencies have scammed a total of $450 million from unknowing Americans.

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Of course, these practices are not new. However, scammers are getting more brazen and smart in how they approach people to gain their trust, often capitalizing on catastrophes like the current pandemic and weak economy while many are desperate for solutions. With the popularity of social media and more security breaches, many scammers are able to hack into a person’s profile to make it seem like the message is authentic.

In other instances, the information looks like it’s coming from a reliable entity. The recent flooding in Kentucky has caused a spike in scams that appear to come from FEMA asking those applying for relief funds to first pay a processing fee — this is never the procedure of FEMA. Some have even reported they are being offered federal student loan relief as their children go back to school.

But don’t lose hope, as there are ways to protect yourself. Due to the spike in cases, the U.S. Department of Health & Human Services has issued some tips, also sharing that “no legitimate federal government employee would ever call you and tell you that you qualify or have been approved for a grant for which you never applied,” and adding that “it is illegal to ask you to pay to apply for or to increase your odds of being awarded a federal grant.” It should also be noted that there is never a cost to receive info or apply for a government grant, and all applicable options are listed at www.grants.gov. The government will also not call you to seek money.

The agency warned that con artists use letterhead from the HHS or logos to appear official; the HHS does not use private firms ever. And just because the call looks like it has an area code from Washington, D.C., this does not mean it’s legitimate — scammers have found ways to use shadow numbers while calling from anywhere in the world. HHS recommended always looking up the number and verifying it’s the official one listed on the agency’s website.

Here are some other tips offered by the HHS to protect yourself from the current wave of government grant scams:

  1. Never give out your bank account information unless you know the company reaching out to you and can verify it’s necessary for them to know the info.

  2. If the person is asking for wire transfers, gift cards or prepaid debit cards or peer payments like Venmo, that’s a big red flag. These are as untraceable as cash and once it’s gone, you won’t be able to recoup the funds.

  3. Check the usa.gov website to access the full index of official government agencies. Scammers will make up names closely resembling government offices, so a quick verification will let you know if it’s fake.

  4. Take action by placing yourself on the National Do Not Call Registry to cut down on the calls you receive (register online at donotcall.gov). If you do come across a scam, you can report it to the FTC at reportfraud.ftc.gov.

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One final helpful tip is to look for similar complaints online — if you copy/paste the message or look up the phone number that’s contacting you, oftentimes you can find reports of it being a scam and can avoid interacting with the person on the other end.

This article originally appeared on GOBankingRates.com: Beware Latest Government Grant Scams — Warning Signs and How To Protect Yourself