Government grant scam looks like text from a friend — and victims are losing thousands

Inflation is pushing everyone's buttons so when Aunt Sally sends a quick note about a way to get free money, well, some folks listen. 

Unfortunately, consumer watchdogs are seeing a troubling uptick in what are called "government grant scams" where consumers can often lose thousands of dollars up front as they seek $50,000 or more in grant money.

The scams often start with social media messages or texts that appear to be from a well-meaning friend or family member about a new government grant, according to AARP fraud expert Amy Nofziger. 

One victim, Nofziger said, lost $9,200.

Another lost about $4,500. 

Another victim lost more than $4,000. 

One consumer got a text message from her friend that the government is giving away U.S. grants to help people due to COVID. That victim bought $200 in American Express gift cards to pay upfront as part of the fake grant process. Then she was told those gift cards won't work and she was told to put another $200 on Apple gift cards. That's when she realized it was a scam. 

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But hope can be a powerful tool when it comes to running a scam and many times victims are convinced they're doing the right thing for their financial future. 

The fake grants are supposedly going to get you an extra $50,000 or more. 

"People think, 'Well if I pay $4,000 and I get $100,000 then that's not a bad investment,' " said Nofziger, who studied a batch of recent reports that consumers made to the AARP Fraud Watch Network.

"Obviously, there is no grant."

Another consumer got a text supposedly from his uncle and then lost more than $10,000 in prepaid gift cards and cash. After putting savings toward the fake grant, the consumer admitted being under significant financial duress. 

"Who wouldn't be?" Nofziger asked. "For having $10,000 stolen?" 

Scammers have a government grant to fix anything

Government grant scams can show an uptick for all sorts of reasons — catastrophic flooding in several communities created an opening for some scams, economic uncertainty triggered by the COVID pandemic continues and leaves many families struggling, and every day someone is dealing with losing a job or another financial challenge. 

As students head back to college, scammers are promising to reduce your student debt by guaranteeing a hefty grant out of the blue. You want to be extra careful and search for complaints online. Contact your student financial aid office to make sure any potential grant is legitimate. 

The problem is that the grants aren't real — and the scammers ask for money or Social Security numbers up front to start the ball rolling. Sometimes, scammers request personal information like a copy of your driver's license. 

The scammers, Nofziger said, usually want that money via gift cards, cryptocurrency or peer-to-peer payments like Zelle or Venmo. 

You might feel safe when the message looks like it's coming from a friend or relative but typically fraudsters have hacked into a Facebook page, she said, and then send a message impersonating someone you trust. 

Many times, the victims who lose this money really need it to cover their expenses. But they're encouraged to send what savings they have now to get a sizable grant. 

"It's definitely a problem and it's really increased over the last couple weeks," Nofziger said. "High dollar amounts." 

She said the network had about 15 victims just on one day in early August. 

"I was just shocked at how many government grant victims we had." 

Scammers impersonate your best friend, cousin, uncle

In some cases, hackers are trying to direct you to a website as part of the scam to gain control over your Facebook account and keep the impersonation scams going. 

Consumer watchdogs also heard from one victim who ran into a government grant scam operated through a phony "Department of Health and Human Services" Facebook page. The woman had paid $4,000 to “Agent Donna Twinn” in 2021 to collect the promised grant, according to a new Consumer Federation of America report.

The Ohio woman never received any grant money. 

"Her original call to us wasn’t to report a scam but to see if we could prod the federal government to hurry up in paying her the grant funds," according to the Ohio Cuyahoga County Department of Consumer Affairs.

Is the government really giving out grants to people to cover living expenses? No. 

Some scammers claim free money or grants are available to pay for education, home repairs, home business expenses, household bills, or other personal needs, according to a warning from the Federal Trade Commission.

When we're dealing with tragic disasters, such as the devastating flooding that took lives in eastern Kentucky, con artists impersonate agencies such as the Federal Emergency Management Agency. In such scams, the con artists might claim a fee is needed to be paid before relief money can be given. 

Again, not true. 

"Don’t believe anyone who promises a disaster grant in return for payment," according to FEMA. 

"In some cases, thieves try to apply for FEMA assistance using names, addresses and Social Security numbers they have stolen from survivors," according to an alert by FEMA.

If you suspect fraudulent activity involving a disaster or FEMA, report via email to StopFEMAFraud@fema.dhs.gov. 

If you spotted a scam, you can report it to the FTC at ReportFraud.ftc.gov. 

Unfortunately, the scammers know our number only too well. If you're living under a great deal of stress, the scammers know how to convince you that they've got just the right government grant to fix your finances. 

ContactSusan Tompor via stompor@freepress.com. Follow her on Twitter@tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.