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$1.7 million going to scam victims

More than 20,000 victims of a scam that convinced consumers they could get government grants are being sent checks.

By Mitch Lipka May 9, 2013 6:13PM

Nearly 23,000 consumers who were duped by a scam that sold them on the idea they could qualify for government grants will be sent about $1.7 million in compensation for their losses, the Federal Trade Commission said Thursday.

Image: Dollar bills floating over U.S. Capitol © CorbisThe first of the checks went out Thursday for victims of the scam, which the FTC shut down in 2009. The scams were pitched through several websites using products including Grant Connect, which was described as a "unique consumer-friendly U.S. government grant program that delivers all of the tools for the consumer to search multiple databases, write grant proposals, and deliver polished plans..."

Images of President Barack Obama and Vice President Joe Biden and an American flag were featured in the promotions for the product along with the claim "$15 Billion of Free Money Available." The sites indicated that consumers would be charged a low one-time fee — from 99 cents to $2.78 — to get Grant Connect. But that came with a surprise of getting signed up and charged as much as $70 a month for other, unrelated services.

Also, the sites claimed federal grants were abundant and easy to obtain by consumers. But they aren't. And much of the information that was provided through the program was either outdated or useless.

The settlement and orders resulting in the payout also bar the defendants from pitching grant-related products and from selling anything that involves automatic recurring charges, the FTC said.

Compensation to consumers depends on how much money they lost, the FTC said. Most can expect to recover about 80% of their loss. Checks being sent by a third-party refund administrator — Gilardi & Co.  — must be cashed within 60 days of receipt.

On a fairly regular basis, the FTC, in particular, has been able to make some fairly significant repayments to scam victims. The agency has set up a website that explains about the repayment program and how it works.

It can take years, though, for these cases to work their way through the process: from when consumers are victimized to when action is taken to when a judge issues an order to when compensation is sent out.

Government grant scams come up from time to time, particularly when there is a big program — like the federal stimulus package — that makes it seem more likely that there really is money for the taking.

Here are some tips from the FTC to avoid these sorts of scams:
  • Don’t give out your bank account information to anyone you don’t know. Scammers pressure people to divulge their bank account information so that they can steal the money in the account. Always keep your bank account information confidential. Don’t share it unless you are familiar with the company and know why the information is necessary.
  • Don’t pay any money for a “free” government grant. If you have to pay money to claim a “free” government grant, it isn’t really free. A real government agency won’t ask you to pay a processing fee for a grant that you have already been awarded — or to pay for a list of grant-making institutions. The names of agencies and foundations that award grants are available for free at any public library or on the Internet. The only official access point for all federal grant-making agencies is
  • Look-alikes aren’t the real thing. Just because the caller says he’s from the “Federal Grants Administration” doesn’t mean that he is. There is no such government agency. Take a moment to check the blue pages in your telephone directory to bear out your hunch — or not.
  • Phone numbers can deceive. Some con artists use Internet technology to disguise their area code in caller ID systems. Although it may look like they’re calling from Washington, D.C., they could be calling from anywhere in the world.

More from MSN Money:

May 10, 2013 10:54AM
The gov. just loves to p!ss money down the drain. Stupid people falling for scams is not my responsibility. Stupid people buying homes that they can not afford is another. Paying for illegitimate bastard children is another. Foreign aid to countries that hate us is mind boggling. Funding for idiotic research such as the sex life of tadpole.
May 9, 2013 10:42PM
Why are our tax dollars being used for this?
May 10, 2013 10:05AM

Because it's the govt's job to protect us from our own stupidity, and we all have a social responsibilty to bear the burden of those less fortunate than us, especially the stupid and the lazy.


Now shut up and pay up.  


Fed 28%  State 6% Local 4% Sales 7% Soc Sec, Medicare, Propertay Tax, Gas Tax, etc, are a modest price to pay for the greater good of society. 


I just wish I could only work 5 hrs a day instead of 10+ (with commute 12+) since that's all getting paid for.  =o(

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