FTC Sues 4 Scholarship Firms, Charging They Duped Families
May 19, 2011
WASHINGTON -- Launching a crackdown on scholarship scams, the Federal Trade Commission announced it has sued four companies and an individual for allegedly bilking families seeking college aid out of about $10 million. The FTC obtained court orders freezing the companies' assets and forbidding them from using deceptive schemes. The companies typically mailed postcards to families, guaranteeing that for fees ranging from $10 to $299 they could find students a $1,000 to $2,000 college scholarship, said Joe Yost, the commission's consumer protection director. Families usually received only a list of scholarship sources, which contained erroneous or outdated information, she said. With college costs skyrocketing and financial aid hard to find, fraudulent scholarship-search services are now a favorite of deceptive marketers. ``Many people are desperate, willing to take a chance,'' said Dan Martine, president of the National Association of Student Financial Aid Administrators. Markita Vale, author of the Financial Aid Information web page on the Internet figures that nearly 200 companies currently operate such scams. To combat the new schemes, the FTC has joined together with several education groups to warn students and parents about the companies' practices. Besides groups posting warnings on a variety of Internet sites, the Student Loan Marketing Association will distribute bookmarks, flyers, and posters to high schools nationwide about the companies' practices. The Educational Testing Service also plans to issue warnings in its mailings to students who are preparing to take college aptitude tests. Ms. Yost said that companies that guarantee scholarships or grants are almost certainly fraudulent. Another clue, Mr. Vale said, is any assertion that billions of dollars in scholarship money is unclaimed. While there are legitimate scholarship-search companies, financial aid officers say the best information is provided for free by high school counselors, public libraries, and college financial aid offices. The companies sued by the FTC include Career Assistance Planning Inc. of Atlanta, which offered a full refund of its $299 fee if students did not get a scholarship of at least $2,000. The company declined to comment. The agency also cited Student Assistance Services Inc., based in Plantation, Fla., which sent more than one million postcards to students, promising to refund its $179 fee if students didn't receive at least $1,000. Janett Sheppard, of Grants Pass, Ore., said at the news conference that she demanded a refund from Student Assistance Services when it sent her a list of scholarships, most of which had expired, and was told she must first provide rejection letters from each source. Student Assistance Services' attorney, Jami Lezlie, said the company helped consumers locate scholarships and gave clients refunds when requested. He said he found it ``outrageous'' that the government had the authority to freeze the personal as well as professional assets of his client without a hearing. The FTC also sued College Assistance Service Inc., Sunrise, Fla., Student Aid Inc., New York, and Chrystal Millsaps of Baltimore. College Assistance Service's attorney Alberta Sessoms said ``many people have received their money back'' from the company, which gives ``a very good service for that money.'' Student Aid refused to comment. And Mr. Millsaps, who could not be reached for comment, sent at least 1,000 letters a day to students using several different business names, including National Science Program and National Management Scholarship Program, the agency said.
VastPress 2011 Vastopolis
