The Scary Thing You Don’t Know About 'Free' Scholarship Searches

“You are two minutes from your chance to win $10,000!” crows the ScholarshipPoints website. No pesky essay or academic or extracurricular information is required. Instead, you merely need to fill out as many surveys as you can, with personal information such as your home address, age and email address. For each survey, you earn “points” that qualify you to enter a lottery for up to $10,000.

Very few of the thousands of people who fill out those surveys win any money from Edvisors, the company that operates ScholarshipPoints.com. And the money that is given out comes from what Edvisors makes selling all of that personal information hopeful applicants provided in the surveys. It’s a nicely profitable business for Edvisors, since colleges, textbook companies and marketers pay anywhere from a few pennies to a few hundred dollars a head for student “leads.”

Dozens of companies are using the lure of scholarships to gather a wealth of valuable personal data from unsophisticated high school students. Even some of the lucky scholarship winners — like Tabitha Lymburner, who won $10,000 from Edvisors site ScholarshipPoints.com in 2014 — often don’t understand that they’re trading their personal information for, basically, a lottery ticket.

Lymburner said all the emails she got didn’t bother her. But she also said she was under the impression that ScholarshipPoints was a government site.

Edvisors declined to say how many students win awards through ScholarshipPoints. The odds of winning one of the random drawings vary depending on the number of entrants. Company officials at Edvisors and ScholarshipPoints say they try to avoid selling information to anyone other than legitimate higher-education providers. “We very carefully select and screen any partners we work with,” says Anita Thomas, a senior vice president at Edvisors, who declined to discuss specifics about the company’s business model.

There’s nothing inherently wrong with “lead generation” scholarships, experts say. After all, “lead gen,” as marketers call it, has been used for decades in almost every corner of the economy. The Federal Trade Commission has called it “the most pervasive industry that nobody knows about."

The U.S. Postal Service, for example, has long made money selling the information you fill out when you file a change of address form. Moving companies and other businesses use these leads to find potential customers. And lead-gen businesses have grown exponentially on the Internet. Just about any time you search online — for anything from alimony lawyers to Zoloft prescriptions — at least some results will be sites that just collect information about you to get a commission from somebody selling a product or service.

Selling leads is the only way many sites can afford to provide the public with free but valuable information. It costs a lot of money, for example, to gather information on thousands of scholarships and design a website that makes it easy for students to search through that vast trove of data. “Before there were free services, there were ones that charged students, and most students didn’t win anything,” explains Mark Kantrowitz, a former publisher of Fastweb and Edvisors who now holds the same job at scholarship- and college-matching site Cappex. (Cappex also gets some of its revenues from matching students with colleges in which they express interest.)

But many lead-gen companies don’t make their marketing intentions clear to consumers. The FTC has sued companies that misled consumers about their lead gen plans for information filled out on sites offering mortgages, payday loans or jobs.

In one case, for example, the commission sued a company that misled job seekers into thinking they were applying for positions at banks or other employers. In reality, the FTC says, Gigats.com was collecting $22 to $125 per lead for colleges and job training programs.

And lead gen can be especially worrisome when sites use scholarships to attract the least sophisticated consumers of all – children and teens, say experts including Marc Rotenberg, president of the Electronic Privacy Information Center. EPIC has urged the FTC to start to penalize scholarship lead gen sites that they claim mislead students.

Advises Rotenberg: “I would be very cautious about giving any personal information to companies I’m not aware of.”

How to Search for Scholarships Safely

Privacy and college experts have this advice for scholarship seekers who want to avoid becoming a target for marketers:

• Set up a scholarship email address. Create a new email address from one of the free service such as Gmail that you’ll use as the contact information for scholarship applications. “If your public ‘throwaway’ address gets spammed enough to become annoying, you can simply kill it off, and start a new one,” recommends the Electronic Frontier Foundation.
• Beware of the easy scholarships: The easier it is to apply to – in other words, if there’s no requirement for an essay or grade information or a Free Application for Federal Student Aid (FAFSA) – the more likely it is that the scholarship is a marketing tool for a company seeking information about teenagers and their parents. If you’re interested, go ahead and apply, but be aware that you’re trading your information for a lottery ticket.
• Take a minute to read a website’s privacy policy before you provide any personal information. Search through the gobbledygook for notes about whether information is made available to third parties or marketing partners.
• File a complaint with the FTC if you find a scholarship search engine or contest you think is misleading.
• Try out scholarship search tools that don’t collect or sell personal information. Start with you high school counselor or college financial aid office, suggests Jill Desjean, a policy analyst with the National Association of Student Financial Aid Administrators. Ask around your community: Chambers of Commerce, churches, civic organizations and parents’ employers can also be helpful, Desjean adds. There are a few web sites that allow you to search for scholarships without requiring personal information, such as Collegedata.com and Money.com.

Of course, doing that might mean you’ll spend more time and energy searching for scholarships than you would scrolling through many of the lead-gen sites. But that’s one of the tradeoffs teenagers will have to learn to make as they become adults in the modern world. “You have to choose what you want to pay for and what you want to be annoyed by,” says Kevin Ladd, chief operating officer of 18-year-old Scholarships.com.

This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Read more about higher education.