Editorial · April 12, 2021
Government Grant Scams: How to Spot a Fake Offer
Government grant scams promise free money from a federal agency, and they are fake. If someone offers you a grant you never applied for, treat it as a scam. This guide shows the usual script, the warning signs, and the one place to look for real grants.
How a fake grant offer works
The offer can come as a phone call, a text, an email or an ad. Some ads run in local papers or magazines. Others are bolder and call you out of the blue.
The script is simple. The caller says you qualify for a free grant. You might hear that you won because you pay your taxes on time. The caller says you never have to pay it back and that your application is sure to be accepted.
Then comes the ask. The caller wants your checking account number so the money can be deposited. Or the caller asks for a one-time processing fee. A refund may be promised if you are unhappy. The grant never arrives, and the money is gone.
The Federal Trade Commission, the national consumer protection agency, says “money for nothing” grant offers are usually scams. Its staff say calls and come-ons for free money are almost always rip-offs.
Seven warning signs
The Grants.gov site is the official federal grant portal. It lists statements that should put you on high alert. Here they are in plain words.
- “You are eligible for a government grant.” The government does not contact people to award grants they never applied for.
- “Pay a small fee to get a grant.” The government does not charge a fee to apply for a federal grant.
- A bureau that does not exist. One example in the Grants.gov list is the “Federal Bureau of Grant Awards.” The FTC points to the “Federal Grants Administration.” Neither is a real agency.
- “Our office is in Washington, D.C.” Caller ID can be faked. The call could come from anywhere in the world.
- “No application needed.” Every federal grant uses an application on a government website. You cannot apply by phone or email.
- “You won in a drawing.” The government does not give grants by raffle or lottery.
- “Spend it any way you like.” Federal grants fund specific programs, research or projects. They do not pay off credit cards or buy home electronics.
What a real federal grant looks like
Real grants are rarely given to people for personal needs. Grants.gov says federal grants go most often to local governments, organizations, institutions and universities. They are tied to a purpose, such as a research study or a community program.
Applying is free. Grants.gov says the government does not charge a fee to apply for a federal grant. It also says that, while some financial details may be part of an application, they should go through a government website. There should never be a cost to you.
A real award also has a paper trail. You apply, you describe how the money will be used, and the agency reviews your request. A phone call that skips all of that is not how federal grant making works.
Protect your bank account
The FTC gives a few basic rules. They are easy to remember.
- Do not give your bank account number to anyone you do not know. Scammers press people to share it so they can drain the account.
- Do not pay for a “free” grant. If you have to pay to claim it, it is not free.
- Do not pay for a list of grant-making groups. The names of agencies and foundations that award grants are free at any public library or online.
- Do not trust a name just because it sounds official.
These rules apply to business owners too. A real program will not ask for a fee up front. It will not ask for your account number on a first call.
Where to look and where to report
The FTC names Grants.gov as the only official access point for all federal grant-making agencies. Start there if you want to see what is actually open. Searching and applying cost nothing.
You can lower the number of sales calls you get by adding your number to the National Do Not Call Registry. Register at donotcall.gov or call 1-888-382-1222. This will not stop criminals, but it cuts down on noise.
If you think you were a victim, file a complaint with the FTC online or call 1-877-FTC-HELP (1-877-382-4357). You can also report grant scam attempts to the Health and Human Services Fraud Hotline at 1-800-447-8477.
The short version
No real grant asks for a fee, a bank account number or a quick yes on the phone. Ask for the agency name, hang up, and look it up yourself. If it is not on Grants.gov, it is not a federal grant.