Stimulus scams are flourishing on the Web
The ink didn’t have time to dry on the American Recovery and Reinvestment Act before the con artists started crawling out on the Web.
“Learn exactly how I got this check for $36,383!” proclaims one site that promises to help you “get your share” of payments from the stimulus law.
Another promises a helpful guide: “How to get your free stimulus grant before it’s too late!”
There are copious government grants to be had, but these sites are scams, said Eileen Harrington, acting director of the Bureau of Consumer Protection at the Federal Trade Commission. Worse, once one site is squashed, another pops out like a cockroach.
Harrington held a recent news conference to expose two sites that the FTC had investigated in the weeks after the act’s passage. Neither site -- www.presidentobamagrants.com and www.officialstimulusgrants.com -- could be found a week later. But search for the now-missing sites and you’ll find dozens more.
In a brilliant example of misinformation, one outfit purports to be a scam-busting site, investigating the promises of government-grant websites and rating them with up to five stars. It warns users to “avoid government-grant information scams.” However, the site’s “top recommendations” lead you to sites that do exactly what Harrington warned about.
What’s the game?
Each of the sites proclaims that you can get information on hundreds of government grants, worth tens of thousands of dollars, for nominal shipping and handling fees. The disclosed fees range from $1 to $3. The sites have you pay that pittance with a credit card.
But in reality, they’re planning to charge you much, much more -- and to be clear, most of these grants really aren’t available to average consumers anyway. So in most cases, you’re going to wind up paying a lot of money to these websites while probably not getting much of anything in return.
The catch is buried in the “terms and conditions,” which coincidentally are hard to find.
The fact that you’re accepting these terms -- but not the terms themselves -- will pop up when you feed in your credit card number.
You have to hunt to find actual terms (that you’ve just accepted by being gullible enough to give your credit information). They’re usually way at the bottom of the page in small type.
How much will you be charged? That depends on how quickly you discover the hidden fees and address them. Most offer a few days’ “free trial,” after which charges start to accrue.
One of the sites the FTC uncovered billed users a one-time fee of $99, plus almost $50 a month for an “online resource center.” It also automatically signed up users for a second membership that cost $30 a month, Harrington said. If you failed to follow complex cancellation procedures, you would pay more than $1,000 over the course of a year.
Among the sites still operating, the charges ranged from $70 to more than $100 a month.
One site, for example, said in its terms and conditions that users are charged $74.95 a month for access to a “help center” after a seven-day free trial. “No refunds will be given for failure to use the requested and/or provided services,” it said. The company’s terms revealed that after 14 days a second “membership” kicks in, to a “mentoring center,” which costs $29.95 more a month.
Another top recommendation of the supposed scam-busting site charges $39.95 a month (after seven days “free”) and signs up users for two other services that total $19 a month. The site also warns that the charges are nonrefundable.
You’d also read in the terms -- if you managed to find them -- that both of the sites guarantee nothing and users are cautioned to use the sites “at their own risk.”
Aside from the hidden charges, Harrington said the biggest problem with the sites is that they mislead people into thinking that they’re going to get grants to pay off their credit cards, mortgages or buy Christmas presents. Nothing could be further from the truth.
You can find real government grants at www.grants.gov. And you can see how government stimulus funds are being spent at www.recovery.gov.
But the average consumer wouldn’t qualify for most of the government grants available. For example, the stimulus act created grants for those willing and able to recruit, train and manage AmeriCorps volunteers. It also set aside $20 million for rural business development. But to get one of these grants, you’d need to be an existing government contractor, state or municipal agency or a nonprofit.
There are also grants for scientific research, clean-fuel technology and for those with ideas on how to make the criminal justice system more efficient. There are housing grants for Native American organizations and supporting the development of rural businesses.
Grants to help you pay off your credit cards? Get real.
“People who make a living defrauding consumers are quite opportunistic,” said Harrington in an interview. “They read the paper. They watch the news. When you combine the serious economic downturn that we’re experiencing with government programs and action, they seize on the combination of circumstances to defraud consumers.”
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