Vets targeted by phone scams and pitches for benefit buyouts
Military veterans are a prime target for telephone scams and even more likely to end up as fraud victims than the general public, according to a new survey released by AARP.
The survey indicates that veterans can be victimized twice as often as the rest of the public. The research indicates that about 16 percent of U.S. veterans have lost money to fraudsters, compared with 8 percent of others during the past five years.
“What makes them more vulnerable is technology and patriotism,” said Doug Shadel, lead researcher for AARP’s Fraud Watch Network.
Con artists will tell you, he said, that the best way to scam a vet is to pretend to be a vet. In general, veterans may be more willing to trust someone who claims to have served in the military than those who have not. And they may ask fewer questions about giving money to a charity that claims to support service members and veterans.
November is National Veterans and Military Families Month and a good time to remind vets that a call that seemingly comes out of the blue isn’t really a fluke at all. An amazing amount of information is available on databases and via social media that can help con artists accurately target veterans.
The AARP Fraud Watch Network and the U.S. Postal Inspection Service announced the launch of Operation Protect Veterans—a national campaign to warn the military about scams. Operation Protect Veterans will use ads, email messages, social media and a new website to get the word out.
Scam warnings are being conveyed by phone, too, using the same tool as fraudsters.
Veterans lose money to all sorts of scams, including tech support scams, those involving fake business and job opportunities, and charity scams that play up connections to veterans, according to those surveyed.
About 80 percent of the veterans surveyed said they have encountered scams that specifically target vets or the military.
“They get all the same scam calls we get, except they also get a lot more of these things that target veterans,” Shadel said.
According to the AARP research, veterans who end up as scam victims may have faced a significant financial loss or could be juggling a sizable amount of debt. Some have suffered a serious injury, illness or struggle with mental health or addiction issues.
Scams offer vets cash in exchange for their future disability or pension payouts.
Watchdog groups warn that benefits buyout offers can turn out to give you just a small fraction of the value of the benefit and in some cases the vet could end up losing eligibility for benefits such as Medicaid and other assistance.
The ads online and elsewhere, however, hold out a different vision—of leveraging a military pension or benefits by exchanging a “future trickle of income for cold, hard cash in your hands today.”
Chad Wright of Salley, S.C., said he turned to one of these programs to get out of a tight spot when he, his wife and four daughters were threatened with losing their home in 2013.
Wright, who served in the U.S. Army from 1989 to 1994, injured his spine during a parachute training jump. He receives 40 percent military disability. And he signed a contract with a company called BAIC to get a lump sump upfront in early 2014.
He thought he’d get a fairly large, five-figure payout. But before he got any money, the firm forced Wright to use most of the money to pay off existing creditors. Wright questions whether much of the alleged debt was even his because he was the victim of identity theft so a thief could have racked up bills by opening credit cards in his name.
He ended up with about $8,000 from the benefits payout.
Wright is a plaintiff in a suit filed in the U.S. District Court for the District of South Carolina in Greenville against BAIC Inc., the Voyager Financial Group, and others.
Wright, who works in a mail room at the Veterans Affairs hospital in Columbia, S.C., said he had no idea that such agreements to purchase military pensions or benefits were prohibited under the Federal AntiAssignment Acts. He was not aware that the effective rate of interest he’d pay exceeded legal limits.
Exchanging future pension payments for upfront cash turns into an expensive way to borrow. The suit notes that the undisclosed effective interest rates or finance charges charged to veterans who want a lump sum advance on pensions can range between 25 percent and 47.18 percent. You’d owe far more over time than you borrowed upfront.
Wright said such outfits prey on people who face financial problems, much like payday loan or check cashing outfits.
“They’re using people,” he said. “It’s taking advantage of someone’s situation. I wouldn’t want to be the person making money off that.”
Some sketchy pitches can be made to raise money for veterans where the money you donate can go mostly to pay telemarketers, not vets.
Michigan Attorney General Bill Schuette announced a settlement recently involving 24 states and the VietNow National Headquarters, an Illinois nonprofit that ended up being dissolved.
“This settlement rids the country of a veterans charity that deceived donors, helped very few veterans and largely served to enrich its professional fundraisers,” Schuette said.
VietNow—which also used the name VeteransNow— told donors that a minimum of 12 percent after expenses was given to veterans in a given state. But the group did not have local programs.
VietNow raised nearly $2 million nationwide. But, Schuette said, most of that cash was paid to fundraisers and less than 5 percent of the money went to charitable programs, with even less money directly helping veterans.
Vets are encouraged to research groups before giving any money.
Shady investment advisers can claim that a vet could snag additional government benefits by overhauling their investment holdings, according to the AARP warning.