Monday, March 21, 2011

12 Common Scams That Target College Kids

This article was originally posted on the following site: I would like to thank Emma Taylor for suggesting this article be posted on my blog.

March 20th, 2011

There’s a lot of room for growing pains in college, from switching your majors to learning how to juggle work and school to living on your own. And while figuring out your personal finances is also good practice in college, certain scams threaten to turn an honest mistake into something much worse, even illegal. From diploma mills to phishing on job boards to scary credit card deals, here are 12 common scams that target college kids– scams that every student should know about to safeguard their identity and bank account information.

1. Buying books online: Since college students are online a significant number of hours each week anyway, many scamming companies believe it’s an easy way to commit identity theft and credit card fraud. A common trick is to sell ridiculously discounted textbooks, but once you submit your credit card information, you may not ever see those books — and might discover that you’ve lost thousands of dollars from identity theft.

2. Fake credit card applications: IdentityHawk published a helpful article on another very common scam targeting college students — fake credit card applications. Credit card companies often show up on campus, luring students into bad credit card contracts, but mixed in with the legitimate — if unfair — offers are identity thieves who’ve set up tables and give out t-shirts, too. These companies can make easy money by stealing the information they collect on students’ applications and by skimming small amounts of money each statement, spread out over long periods of time so that students — who don’t usually read their statements very carefully — won’t notice. If you want a credit card, go right to the bank, and don’t sign up for one from a booth on campus.

3. Advance Fee Scam: Lynnette Khalfani-Cox explains that this scam involves asking students for advance fees in order to secure student loans. Sometimes, these fees can be up to 3 or 4% of the total loan, but legitimate agencies never ask for this sort of payment. Hang up the phone or walk away immediately if you’re approached with this type of offer.

4. Address farming: Another identity theft scam zeroes in on larger groups of students, like Greek organizations and other clubs. Thieves ask these organizations for lists of addresses and other personal information of all the members, promising credit cards or other services, but disappear once they have enough information to steal their identities. It’s an easy trick, because with minimal effort, thieves can walk away with hundreds of fake accounts.

5. Diploma mills: Diploma mills are very serious scams that all prospective college students should be aware of. Any school or organization that has no brick-and-mortar address — even an online school should have one — or that promises a diploma for little-to-no work is probably issuing diplomas and degrees that are fraudulent. You might pay years worth of "tuition" to a fake company, and will have no degree or educational value to show for it. Check with the Council for Higher Education Accreditation (CHEA) when researching higher education options, and never enroll in a school that isn’t accredited.

6. Loan Consolidation Scam: If you intend to consolidate your student loans to bring down interest rates and organize payments, go right to the bank or credit card company. Unsolicited offers from companies may point to a scam that collects extra fees to help you get organized, but really just steals your money and doesn’t help you pay back any of your loans.

7. Scholarship fraud: There are eight federally recognized scholarship scams in the United States, and the Federal Trade Commission lists them here. Through telemarketing and other strategies, individuals hide behind official-sounding names and offer scholarships to students in need. But no money is ever granted, and students’ identities are compromised.

8. Identity theft via WiFi: Anyone using WiFi on an unsecured network is at risk for identity theft, but because college students more often take their computers to coffee shops, parks, restaurants and other public places to study, they might be at a higher risk for this type of scam. Use encryption software and password protection to block identity thieves when you work in public, and don’t log onto banking websites or other sites that contain very personal information.

9. Debt elimination scam: Wouldn’t it be great if a stranger walked up to you and offered to help you pay off your student loans and debt? There’s a reason this fantasy should remain a dream — it’s too good to happen in real life. In fact, debt elimination scams are popular but completely illegal and fraudulent. If someone offers to help you pay off your debt — after you give them a fee — walk away. There are certain reasons the federal government will help you dissolve student loans, but that’s the only organization that can do so.

10. Grant scam: Scammers calling students and claiming to be representatives from the U.S. Department of Education attempted to steal bank account numbers while they promised to give students grants for school, in the amount of $8,000. No money was ever awarded the students, and the scammers also asked for fees in addition to bank account information. Merced College shared with students tips for avoiding these scams, and recommended that if any calls were received, to contact your bank, asking them to monitor or close your bank account.

11. Secret Shopper: Becoming a secret shopper can be a legitimate way to earn some extra money on the side, but this potential money-making opportunity was actually a scam targeting college students. University of Mobile students in Alabama were contacted by a fraudulent secret shopping company after applying for similar jobs online. They were sent information in the mail with instructions and forms to fill out, and even made calls to the company to verify that it existed. But despite all of the authoritative-looking documents — and checks that were even approved by banks — the company was a total scam, costing students $4,000 in a single transaction, and the potential for committing fraud themselves, since the checks they were sent from the company were forged from stolen bank accounts.

12. Phishing on job boards: Brandeis posted a warning to students on its website about a phishing scam appearing on job boards. One company specifically targeted students at Brandeis, but similar scams can target other students as well. Report the job posting as a scam if it asks for your credit card and banking information, the e-mail address domain name does not match the alleged company name or employer name, and you are asked to accept a payment in exchange for wiring money or letting them use your bank account.

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