(Courtesy of SCORE.org)

You get a call, email or letter from the federal government saying you are the winner of a free U.S. grant. All you have to do is pay a processing fee to receive the money.

How do you know if the offer is legitimate or a scam? In this situation, it’s wise to recall two adages: 1) If it appears too good to be true, it probably is, and 2) there is no such thing as a free lunch. According to the U.S. Department of Justice, FBI and other Federal Agencies, fake U.S. grant scams are on the rise across the country.

Here are five ways to spot a grant scam:

  1. Did you apply for a grant? Legitimate grants do not show up at your door as a surprise—you have to apply for them. So, if you are offered a grant you know nothing about, most likely it is a scam.
  2. Is a fee involved? Grant applications are usually free as they are sourced at the federal or state/county level with public funds. If you are asked to submit a fee to apply for the grant or learn more about it, there’s a good chance it is scam. Asking for an application fee is the number-one way scammers make their money.
  3. Is the grant for business or personal use? U.S. grants to a business or nonprofit are for the sole benefit of the company. If the grant is for school, living or other personal expenses, that’s an immediate red flag that it is not legit.
  4. What agency does the issuer represent? Although it may sound impressive, if they are from the Federal Grants Administration, there is no such office, so the offer is a scam.
  5. Were you asked for either your personal or your company’s ID or your bank account information? When asked for this info, ask the caller for the proposal in writing. Chances are you will never hear from them again.