March 04, 2009, 2:24 PM — Some Web sites appearing to offer free U.S. government grants tied to a recently passed economic stimulus package can end up bilking unwary consumers out of more than US$1,000, the U.S. Federal Trade Commission said Wednesday.
The economic stimulus package, passed in mid-February by the U.S. Congress, has created an unintended cottage industry of Web sites and e-mail spammers that are promising access to funds but are actually taking money or personal information from people who sign up, the FTC said.
Economic stimulus scams "have literally mushroomed up overnight," said Eileen Harrington, acting director of the FTC's Bureau of Consumer Protection. The FTC asked Web advertising companies to screen out ads for stimulus scams. Facebook started cancelling the ads before the FTC asked for help, and Google has agreed to watch out for the scam ads, Harrington said.
"Unfortunately, it's taken scam artists no time at all to exploit the headlines about the president's plan and to use those headlines to stimulate their own fraudulent businesses," Harrington said.
Web sites such as PresidentObamaGrants.com and OfficialStimulusGrants.com promised to point consumers to thousands of dollars in free stimulus money if they paid about $2 to sign up. Instead, those sites then charged consumers hefty monthly fees if they failed to cancel the service, Harrington said.
Both sites appeared to be offline Wednesday, but PresidentObamaGrants.com charged consumers' credit cards an additional $99 fee if they failed to cancel the service within 14 days. The site then charged consumers an additional $49.95 per month for its service and $29.95 for a debt-related service, meaning a consumers would be charged more than $1,000 in a year if they didn't successfully cancel the service.
OfficialStimulusGrants.com operated in much the same way, charging $94.89 a month if consumers didn't cancel within seven days. Both sites, and others like them, buried the terms in long user agreements, and the sites required consumers to go through a "detailed and complex" cancellation process, Harrington said.
Consumers interested in government grants should go instead to Grants.gov, an official government site with free information, the FTC recommended. People interested in information about the economic stimulus package can go to Recovery.gov. Consumers should be wary of any site that offers government grant information in exchange for a fee, Harrington said.
In addition to the scam Web sites, spammers have been sending out e-mail messages promising stimulus package money in exchange for personal information, such as bank account numbers, the FTC said. In some cases, if recipients click on links in the e-mail messages, their computers will download spyware or other malware, the agency said.
"Delete these e-mails," Harrington recommended. "Don't open them; don't open the links."
Harrington declined to say if the FTC is investigating any of the Web sites or e-mail senders. The FTC doesn't comment on investigations until the agency files official complaints against suspected scammers.
The FTC is unsure of how many consumers have been defrauded so far, she added.