Government Grant and Loan Scams

Hello Scam Wise readers! 🏛️💰 Ready to talk about “free money” scams? Because that’s what government grant and loan scams promise – and they’re almost always phony. Scammers love to pose as government agencies or officials offering grants, special loans, or pandemic relief, especially targeting people who could use a financial break. Let’s demystify these scams and learn why, sadly, the government isn’t emailing you out of the blue to give you cash (if only!). Armed with this knowledge, you won’t let con artists grant themselves access to your wallet.

Scam Prevention Tips for Grant & Loan Offers

• No upfront fees for real government grants: If someone claims you’ve won or are eligible for a government grant (for business, education, personal use, whatever) but you must pay a “processing fee” or “tax” upfront , it’s a scam. Federal and state grant programs do not charge you to give you money. Scammers might say, “Buy $250 in gift cards to pay the release fee for your $10,000 grant.” The government will never ask for gift cards, wire transfers, or your bank account upfront in exchange for a grant.
• Unsolicited calls or messages = red flag: Unless you applied for something, no government agency will contact you to offer free money out of the blue . That Facebook message from your “friend” saying they saw your name on a grant list? Likely their account was hacked or it’s a cloned profile. That call from “Federal Grants Dept” – doesn’t exist. Hang up or delete, and if curious, search the supposed program name + “scam”. You’ll often find warnings.
• Verify “government” communications independently: Scammers can spoof caller ID to show “IRS” or use official-looking logos in emails. If you receive communication about a government grant or loan, don’t use contact info in the message. Instead, go to the official .gov website (for IRS, Dept. of Education, etc.) or USA.gov and find info on grants or contact numbers. You can also call agencies like your state’s consumer protection office to ask if the program is real. Almost always, random grant offers are bogus.
• Guard your information: Grant scams often are a ruse to collect personal data (Social Security number, bank details) Never give your SSN or financial info to someone who called you or messaged you out of nowhere. Real government agencies usually have you apply securely through forms and won’t do the process over a casual phone call. Also, remember legitimate government emails will usually come from .gov addresses, not Gmail or weird misspellings.
• Know the common scam pitches: They change a bit with the times. Recently, scammers have impersonated the Student Loan Forgiveness program – claiming they can expedite relief for a fee (when in reality the official program is free to apply). They’ve posed as the Small Business Administration (SBA) offering pandemic grants or loans, again asking fees or personal info. And the classic: “You were randomly selected for a federal grant” – this is never a thing. Being aware of these themes helps you smell a scam a mile away.

Real-Life Scam Example

One heartbreaking example: A senior citizen in Texas got a call from someone claiming to be from the “Federal Grants Department” (note: no such department). The caller knew some of her basic info (likely from public records or data breaches) and told her she was eligible for a $9,000 grant for being a good taxpayer with no criminal record – a story scammers use often. To receive it, she just needed to pay a one-time $250 processing fee via gift cards. She was skeptical at first, but the caller transferred her to a “supervisor” who gave a callback number with a 202 (Washington, DC) area code. They even gave her what sounded like an official grant ID number. She ended up buying $250 in iTunes gift cards and giving them the codes. Of course, the grant never materialized. She then was told the grant had increased to $12,000, but she needed to pay insurance on it – another $500. Sadly, she paid that too. Only after she told her son what was happening did they realize it was a scam. Total loss: $750, plus a blow to her trust.

Another example: a college student sees a post on Instagram about a “free government scholarship grant” . She messages the poster (who appears to be a friend-of-a-friend) and they claim they got $20k from a federal program and see if she wants in. They direct her to an “agent” (scammer) who asks for her SSN and a $300 “delivery fee.” She pays via CashApp. Next, the scammer says the IRS needs $1,000 in taxes paid before releasing her grant. That’s when she gets suspicious and stops. Unfortunately, her $300 is gone, and now a scammer has her SSN – setting her up for potential identity theft.

On a larger scale: In 2020 and 2021, with COVID relief programs, scammers went wild. The FTC reported many instances of people getting texts or emails about “pre-approved pandemic relief loans” or “government hardship grants” – often directed to phishing websites that look like SBA or FEMA. One major bust involved scammers creating a fake website that mimicked a Treasury Department page, tricking small business owners into giving their banking info for a promised grant. Treasury OIG (Office of Inspector General) put out fraud alerts about this. It shows how convincing these deceptions can be.

Scam Radar: What’s Trending Now?

Student Loan Scams: Right now, many borrowers are navigating loan forgiveness and repayment changes. Scammers pose as the Dept. of Education or “loan relief advisors,” claiming they can secure forgiveness for a fee or need your FSA login to help. Remember: applying for legitimate federal student loan forgiveness or repayment plans is free at StudentAid.gov – no private company can get you a better deal for money. And never share your Federal Student Aid ID password; that’s like handing over your identity.

“Government” on social media: Impersonators on Facebook or WhatsApp might message you as if they’re an official or even pretend to be someone you know who got a grant. They often mention programs like “Community Development Block Grant” or made-up ones like “American Recovery and Reinvestment Act (ARRA) grant” – using real terms to sound legit. Be very wary of any government deal being handled through casual chat.

Grant Scams Targeting Minorities or Specific Groups: Scammers sometimes tailor their pitch to target communities. For instance, they might tell immigrants about a special “new immigrant grant,” or veterans about a “veterans relief grant.” Sadly, they prey on goodwill programs that people wish existed. Always verify through official channels – e.g., a quick call to a known veterans’ service office can confirm a rumor.

Political Scam Season: In election years, scammers even pose as government or charity organizations tied to political causes or census workers. For instance, around census time (like in 2020), some people got fake census forms via email asking for money to avoid fines. The Census Bureau doesn’t do that; participation is free and they don’t threaten jail via email. Just something to keep in mind: context matters, scammers follow headlines.

On the bright side, awareness is rising. The FTC’s data shows more reports of imposter scams (which includes gov impersonation) because people recognize and report them. Also, tech is filtering some – carrier spam blocks, email spam filters catch many mass scam emails. But personalized approaches (phone calls, social media messages) still slip through, so personal savvy is key.

Extra Protection: Aura’s Safeguards vs. Government Imposters

How can Aura help you against these types of scams?

• ID Theft Monitoring: If you gave away personal data (SSN, etc.) thinking you were applying for a government grant, Aura’s continuous monitoring can alert you if that info is later misused – e.g., someone trying to open a loan in your name or your SSN being sold online. Government scams often lead to identity theft, so this is a crucial safety net.
• Financial Account Monitoring: Suppose a scammer convinces someone to “verify your bank account for the grant deposit” and you share details. They could attempt fraudulent withdrawals. Aura tracks your bank and credit card accounts and would ping you on unusual transactions. Early notice means you can freeze accounts or stop wires faster.
• Safe Browsing & AV: Aura’s tools can block known phishing websites. If you click a link that’s masquerading as, say, Grants.gov but actually is a trap, Aura might flag it or prevent it from loading (if it’s a known bad site). And if any malicious files (like “application forms” that are malware) try to download, the antivirus should catch it.
• VPN for Privacy: Some government loan scams are really about gleaning info from you. Using Aura’s VPN (Virtual Private Network) when browsing adds encryption that can prevent certain types of snooping. It keeps your online interactions private, so if you did engage with a scammer’s site, they’d still not glean extra about your location or network easily.
• Credit Freeze Assistance: If you suspect you gave too much info to a scam, Aura can assist in freezing your credit with bureaus. This makes it much harder for scammers to open new lines in your name. Aura’s platform often has guidance or one-click tools to initiate freezes (and you have their support team for help).
• $1M Insurance & Support: In the worst-case scenario, say a government scam led to someone stealing your identity and causing financial loss, Aura’s identity theft insurance could cover certain out-of-pocket costs, and their fraud resolution team would walk you through recovery steps (filing reports, disputing fraudulent debts, etc.). The emotional toll of these scams can be high; having experts on call is a big relief.

If you think an extra layer of security could help (and honestly, who couldn’t use that?), check out Aura here. It’s not a magic shield against scammers contacting you – we rely on savvy for that – but it drastically lowers the damage they can do if you ever slip up or if they already have some of your data.

Quick Takeaways

• Government doesn’t call to give away money: Unsolicited grant/loan offers are scams. You typically have to apply for government assistance – and those applications are free.
• Upfront payment = no-go: You never have to pay first to get a legitimate government benefit (whether a grant, stimulus, or loan). Fees = fraud.
• Check .gov sources: If you hear about a government program from a stranger or social media, verify it on a real .gov website or by calling a known government phone (county offices, etc.). Don’t trust the info provided by the person who contacted you.
• Don’t share personal/banking info with random callers: Real agencies will have you go through official processes. They won’t ask for your bank account and SSN over a casual call or Facebook Messenger chat.
• Spread the word: These scams often hit our more vulnerable neighbors – perhaps someone older, or financially stressed. Talk to family and friends about the common grant scam signs. You can be the reason someone avoids getting duped!

Great work staying Scam Wise! Up next: home improvement and contractor scams – the kind that show up at your door or in your neighborhood offering deals that end up costing you dearly. Until then, stay safe and remember: when it comes to “free government money,” trust but verify (and mostly, don’t trust unless you initiated it). 😉