As students search for ways to fund the rising costs of college, many corporate strategists are using scholarships to put their brands in front of young consumers.
The Associated Press recently reported that scholarships offered by e-cigarette and vaporizer retailers in the past two years have wound up on several schools' financial aid office websites, sparking a debate about the morality of such marketing tactics.
"It's been a constant problem," said Vice President of Research at Savingforcollege.com Mark Kantrowitz. "How do you determine whether a promotional scholarship is a promotional scholarship and whether it's worth showing to students?"
The legitimacy of scholarships designed for advertising purposes falls into a gray area in terms of law enforcement.
The Federal Trade Commission (FTC) deems a scholarship fraudulent if it misrepresents itself to consumers or covertly shares applicants' personal information, said Gregory Ashe, senior staff attorney at the FTC's Bureau of Consumer Protection.
Some scholarship scams request application fees, but never announce a winner. Others ask for personal information on the condition of privacy but later sell the data.
While the e-cigarette and vaporizer scholarships have drawn criticism from anti-tobacco groups, and have been removed from a number of schools' websites, the FTC would only take legal action if they saw widespread malpractice in the way the companies represented themselves.
"The FTC does not take any position as to the validity of a scholarship based on who offers it," Ashe said. "That's really up to the market to decide."
Some of the companies require users to acknowledge they are of legal smoking age before continuing to the scholarship page. An alert on High Class Vape Co. includes the message: "If you are not legally allowed to purchase our products in your state, please do not enter this site."
The scholarship description offered by Vape Craft Inc. contains several embedded links to the company's homepage and product listings.
Sometimes, companies will offer a scholarship for one year merely to obtain a ".edu" website, Kantrowitz said, which can boost the company's Google search result rankings. They later change the site's content to only advertise their products.
"The solution is that colleges need to check their links," Kantrowitz said. "Not just checking whether the link is broken, but checking to see whether it's linking to what you think it is."
Chandra Owen, assistant director for training and communications in the Office of Financial Aid at Michigan State University (MSU), said she manually checks every external scholarship sent to MSU to make sure she doesn't post an illegitimate scholarship on the office's webpage. If she discovers a fraudulent operation has targeted students directly or through other campus offices, Owen sends out an alert to the student body.
Some of the e-cigarette and vaporizer scholarships have been taken down or have outdated deadlines, but others, such as the SmokeTastic Scholarship, have dates as recent as this spring.
Several of the companies did not respond to requests for comment.
Promotional scholarships are not uncommon. Coca-Cola, Tylenol, and Dr. Pepper award thousands of dollars in scholarships each year, and advertise their brands in the process.
Owen said she wouldn't discourage students from applying for a marketing-based scholarship if they were aware of the product beforehand. However, if companies ask for personal information like Social Security numbers and social media handles, Owen said students should steer clear.
Students should also be wary if they receive awards without applying, can't find information about prior winners, or are charged application fees.
"If the scholarship is charging a fee, move to the next one," the FTC's Ashe said. "There are thousands of scholarships available that don't require the applicant to submit money. Don't be spending money to get money."
The volume of complaints the FTC receives about scholarship fraud has decreased, Ashe said, as law enforcement actions and efforts to educate consumers have intensified. The College Scholarship Fraud Prevention Act of 2000 required the FTC, secretary of education and attorney general to submit an annual report to Congress on scholarship fraud. In 2017, the FTC joined 11 states in launching "Operation Game of Loans" to combat student loan debt relief scams.
If students are unsure whether a scholarship is a marketing scheme or data breach, Ashe said, they should first consult their financial aid office or high school guidance counselor. The FTC, Department of Education (ED), and financial aid informational website finaid.org also list indicators of illegitimate scholarships.
To avoid the risk, Owen advises students and parents to start their scholarship searches locally, where the applicant pool is typically smaller and students are more likely to be familiar with the organizations.
"It seems like most students are wise enough [to avoid scams]," Owen said. However, "some people are very innocent and believe what they read."
Publication Date: 7/2/2018