Many individuals, families, small businesses, and nonprofit organizations continue to struggle as America tries to get back on its feet. Sky high inflation and gas prices coupled with supply chain and workforce woes have made recovery a tough proposition, resulting in desperate attempts to stay afloat.
To many struggling business owners, a government grant seemed the perfect solution to their problems. The best feature of a grant is the funds are free. The organization, agency or institution that gives the money doesn’t require repayment. It could be the perfect short-term fix to fend off the closing of their businesses.
As we’ve said before, scammers never let a good crisis go to waste. The COVID-19 pandemic saw a rise in scams designed to take advantage of those in difficult financial situations. Reported scams aimed at grants and those posing as representatives of government agencies peaked in 2021 but losses to scammers still exceeded $445 million.
The government grant scam goes something like this: the person receives a message by a phone call, email, or a Facebook Messenger note forwarded by a friend or in a text saying, “Attention small business owners. Based on your tax information, you qualify for a free federal grant of $10,000 (or higher). Claim your money by clicking here.”
What’s better than free government money?
Two scenarios could happen if business owner clicks the link:
1) They are prompted to provide their business’ tax information and bank account number. A “confirmation” email then follows stating the funds would be deposited soon.
Fraudsters then have the information necessary to drain the businesses bank account and expose the business to tax complications.
2) They are directed to call an agency representative to assist with the application process. The representative takes their financial information and then says the business owner must pay a processing fee of a few hundred dollars to release “grant” funds. Payment must be made with gift cards, bitcoin or CashApp.
We are aware of a BBB office reporting a small business owner contacted them, saying he had over time sent scammers more than $20,000 worth of iTunes gift cards to obtain a promised grant.
Here are a few things you should know about government grants:
• The only official access point for all federal grant making agencies is www.grants.gov.
• Government grant applications and information about them are free. Lists of names of agencies awarding grants are available free at any public library or on the Internet.
• There are no fees associated with applying for a government grant.
• You will never be solicited by the government offering you a grant.
• Any government grant involves an application process. Projects must have a public purpose and funds are not intended for personal use.
To protect yourself from grant scammers:
• Don’t pay for a “free” government grant. Don’t pay any upfront fees. Federal agencies or employees will never ask people to wire or pay using a gift card, Bitcoin, or CashApp.
• Never give out your bank account information to anyone you do not know no matter how much you are pressured to do so. Never furnish information with anyone unless you are absolutely sure the company or agency you are dealing with is legit and you know exactly why the information is necessary.
• If you have paid a scammer already, act quickly! Scammers intentionally make it tough to get your money back and chances are you won’t. You can try contacting the company used to send the money. Tell them the gift card, money transfer, or cryptocurrency company was a fraudulent transaction. Then ask them to reverse it. More information can be found at https://consumer.ftc.gov/ or call the BBB at (419)223-7010.
