Scholarship fraud: Welcome to the School of Hard Knocks

More than 175,000 known victims of scholarship fraud exist in the U.S. -- and the Federal Trade Commission wants to stop students today before they fall victim, too. Since 1996, there have been eight federally recognized scholarship scam cases in the U.S., totaling a whopping $22 million. Considering that many of these student victims need financial help desperately only adds extra insult to this type of fraud.

Knowing that need, many organizations mislead and prey on students and their families. Usually, it's through claims stating millions or billions of dollars in scholarship funds go unclaimed each year and a student should benefit from these funds. The organization uses "testimonials" from past scholarship recipients or claims that it has been approved by a government agency, Better Business Bureau or local chamber of commerce, according to to the May 2009 College Scholarship Fraud Prevention Act of 2000 Annual Report to Congress.