New: Crooks Use Green Dot Scam for Advance Fee Fraud

Debit Cards

Green Dot reloadable debit cards become latest weapon in widespread government grant scams: Internet Scambusters #361

Today’s special issue highlights a scam you probably have never heard about, but one that is easy to fall for: the Green Dot scam.

Reloadable debit cards — especially the top-selling, legitimate Green Dot cards — are the new money-moving method of choice for scammers.

Using phony government loans as a front for an advance fee scam, the crooks issue bogus grant checks, then tell victims they must pay a fee by reloading their debit cards.

And that’s not the only new tactic being employed by the grant scam artists, as we explain in this issue.

Let’s get started…

NEW: Crooks Use Green Dot Scam for Advance Fee Fraud

Green Dot reloadable debit cards are the latest weapon for crooks working a well known type of grant scam.

The con itself is a type of advance payment scam in which victims receive what seems to be a grant award check — usually one they didn’t apply for — with a request that they then wire part of the payment back to cover some mythical fees.

You know the rest — the victim wires the money, then the check bounces.

Now that so many people have wised up to this type of fraud, scammers have hit on the idea of using the legitimate Green Dot card system to collect their money.

Along with the bogus check, usually for just under $5,000, an accompanying letter says recipients must pay a finder’s fee of 10% to the “broker” who secured the grant.

Now here’s the sneaky trick. The letter tells victims to buy a Green Dot MoneyPak, of the sort available at many retail outlets including drug stores.

MoneyPaks are used to top up existing Green Dot debit cards. The victim sends details of the card to the “broker.” These are used to top up the crook’s own Green Dot card — and then quickly drained at an ATM.

In other words, it’s a money transfer that bypasses the traditional cash-wiring companies and offers a far more effective cloak of anonymity for the advance fee scammers.

But There’s More…

To add to the effectiveness of this con, the grant scam artists use another trick to delay their discovery. They use “legitimate” checks from active verifiable bank accounts — either stolen or forged.

This means that banks may accept them without query and the money may even show up in victims’ accounts. A few weeks later, their bogus status is revealed — by which time the victim has bought the MoneyPak and sent the details to the scammer.

Additional New Grant Scams

This con trick is just the tip of the grant scams iceberg. In a previous issue, The Truth About Government Grant Scams, we explained how crooks were using the availability of government grants as a cover for scamming individuals and businesses.

With the economy still struggling to emerge from recession, these government grant scams have become more brutal than ever, with many new variations popping up.

On the advance fee type of scam, for instance, another new ruse is to set up supposed debt consolidation and grant companies with a religious tag attached.

Scammers use faith-related words like “Christian” in the business name, both to give it credibility and to draw in victims from these faiths. And, of course, they don’t care that you’re already in a financial mess before they soak you for a few hundred (or more) dollars.

There could hardly be more devastating evidence of the heartlessness of scammers than in a recent incident in Detroit where unemployment is 28%, with 60% of people now existing below the poverty line.

Hardly surprising that when the city announced a grant program to help the needy with food and rent, 60,000 people turned up on a single day to complete application forms.

Sadly, only a few thousand grants were available and the city quickly ran out of forms at the public application event.

Enter the scammers, armed with worthless photocopies of the form. The forms, even the copies, clearly stated that applications would only be accepted on original documents. Copies would not be accepted.

But that didn’t stop the scammers charging $20 apiece. And, according to a city official, they did a brisk business.

Still More Grant Scams…

Also riding the grant scam gravy train comes a whole raft of money-making schemes disguised as information, training or job opportunities.

Some of these are perfectly legal, but legit or not, they all aim to cash in on people’s ignorance.

Some are not scams: they just charge exorbitant seminar attendance fees or website access fees to provide information that is easily available free of charge.

However, some clearly cross the scam line. How about this for a sneaky trick:

You sign up for a grant-search service that seems to call for a one-off credit card payment, with a money-back guarantee. You scrutinize the fine print. Everything looks OK, so you enter your details and press “submit.”

The page disappears then re-appears with the form fields empty, as though something went wrong, so you patiently fill it in again, and this time it’s accepted.

If you didn’t check the fine print again — and why would you? — you won’t have noticed that it’s a slightly different form and this time you’re signing up for a service that requires regular payments, drawn on your credit card!

What’s more, by doing so, you nullified the money back guarantee.


Our advice can be summarized in these four tips:

  1. If you want to know what government grants are available, ask the government. Start at the target=”_blank”> or target=”_blank”> sites. Don’t be fooled by other sites that have ‘government’ or other official words in the title.
  2. If you decide to pay someone for grant advice, check out their credentials carefully and make sure you know what you’re paying for. Don’t be taken in by suggestions of religious affiliation.
  3. Check out your local community college for possible advice or courses that will help you understand the grants that are available, without paying through the nose.
  4. There are no guarantees that you will get a grant, no matter who you apply to or what forms or software you use. You’re unlikely to improve your chances of getting cash by using paid-for materials.

Oh and don’t forget where we started here. If you get a grant check you didn’t expect and a request for a Green Dot fee payment, trash it!

Time to conclude for today — have a great week!