Business

'Free' money has steep price

Spending just $1.98 for shipping and handling for a CD to help you find "free money" through government grants could seem like a pretty good bargain when money is tight.

But consumers are flooding the message boards that the charges won't stop there. Oh, no. Things got so bad that one consumer said this deal was "synonymous with Bernie Madoff."

How much can $1.98 cost you?

Heather Priestman, 31, paid $1.98 earlier this year with a debit card to get information about getting a grant for starting a small business or going back to school. She saw the pitch for "Grant One Day" on an infomercial.

But once she used her debit card, another $190 or so was quickly taken out of her checking account. She didn't notice it right away because she doesn't always use her checking account. So then, she ended up with overdraft charges of about $200 when she tried to write checks to cover other bills.

"It was a nightmare of a decision," said Priestman, who lives in Marysville, Mich., and is laid off.

As consumers deal with a brutal economy, they need to pay attention to warnings about easy money con artists.

"They raise people's hopes and then they drive them deeper into the hole," said David Vladeck, director of the Federal Trade Commission's Bureau of Consumer Protection.

Last month, the FTC announced a crackdown on scammers who take advantage of the economic downturn. Operation Short Change targets several schemes, including bogus government grants. See www.ftc.gov.

Law enforcement action was taken against a company called Grants for You Now with the Web sites grantsforyounow.com, grantoneday.org, and easygrantaccess.com.

According to the FTC, the grant promotions "deceived consumers by promising them free government grant money to use for personal expenses or to pay off debt."

According to the FTC complaint, after obtaining consumers' credit or debit account information to process a $1.99 fee, the defendants failed to adequately disclose that consumers would be enrolled in a membership program that cost as much as $94.89 a month.

Some consumers also were charged a one-time fee of $19.12 for a third-party Google Profit program. The FTC said all the defendants' Web sites falsely offered a "100% No Hassle Money Back Guarantee." This case was filed in the U.S. District Court for the Central District of California.

The bottom line: You can't get grant money that easily. Tim Burns, public affairs director for the Better Business Bureau Serving Eastern Michigan, said scam artists want access to your credit card or debit card, making it possible for you to lose even more money.

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