How Veterans, Active Duty Members and Military Families Can Avoid Fraud

The Servicemember's Guide to Financial Scams

ByMoneyGeek Team

Updated: May 2, 2023

ByMoneyGeek Team

Updated: May 2, 2023

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Members of the American military may willingly put themselves in the line of fire in a war zone, but few likely realize they are in the crosshairs of scammers back home. Their steady salaries, along with other support military members get from government agencies, non-profits, and civilians, attract con artists who target service members, their families, and veterans with fraudulent schemes. This guide provides an overview of common scams and dishonest lending aimed at service members and veterans.

Why Are Members of the Military Targets?

Active duty servicemembers, their families and veterans are targeted by fraudsters because they receive regular paychecks and benefits. They are also loyal to each other and are often quick to help out a fellow service member in need, which can make them vulnerable to scams in which someone pretends to be a fellow vet. Knowing that servicemembers are subject to sudden deployments and relocations, swindlers take advantage of military families trying to sell their household goods quickly. The online availability of military records can also make it easy for crooks to gain access to the personal history of veterans and their military records.

12 Scams that Target Veterans and Service members

Below is an overview of some of the most common fraud aimed at military personnel, veterans, and the AARP. Learn how they work, who's most vulnerable, and what to watch out for to protect yourself.

Military Records Scam

Grifters will entice veterans to pay for access to military records or government forms with the promise of discounts, even though veterans can obtain these records for free. You can access your military records for free by going online.

Anyone offering discounts to access military records or seeking payment to do so.

VA Imposter Scam

Beware of phone calls and emails from someone claiming to be from the U.S. Department of Veterans Affairs seeking to update your personal information. These so-called "phishing" scams are a prelude to identity theft. If you get a request, hang up and call the agency back to make sure the request is legitimate before sharing information. You can verify the request by contacting the VA through the phone numbers listed on the web.

If you are providing information to the VA over a website, be sure you enter the address yourself rather than clicking through to it from an email. Check for the locked symbol on your browser by the URL to ensure you are on a secured website before entering information. Also, be careful about downloading files and opening attachments sent in emails. These can launch spyware that gathers personal information and passwords from your computer.

Unsolicited calls asking for personal information. The VA will never call, email, or text veterans seeking personal information. Unless you initiate the contact, do not provide personal and financial information.

Employer Imposter Scam

Another way scam artists try to get the personal information of veterans is by pretending to be an employer seeking to hire vets. These fraudsters will post job listings on online websites, and even advertise them in newspapers, or on television or radio. The goal is to steal personal and financial information from vets, such as social security numbers and other identifiers. Before giving out any personal information, verify the organization is legitimate: Contact the employer directly to verify they are hiring.

Companies that you cannot independently verify are hiring.

Education Grant Scams

Education grant scams take a variety of forms. They include "services" that provide a bogus grant check with instructions to wire money to cover a processing fee when you deposit the check. Other chiselers will market a free financial aid seminar that offers to submit applications for grants and financial aid in exchange for a fee that could be up to $1,000. In these scams, the fraudsters take the money but never apply for grants. If someone calls offering you an educational grant, be cautious. Do not provide personal information over the phone. You can also check the GovLoans website for potential funding available for veterans to use to pay for education.

Someone claiming to be a government agency offering you a grant you did not apply to get. Also avoid companies that say they can guarantee grant money and will handle all the research and applications for you, or tell you they have information that's not available elsewhere.

Pension and Benefits Scams

A common pension and benefits scam involves untrustworthy financial advisors, attorneys, insurance agents and others who target veterans over 65. The swindler convinces them to take their pensions and to transfer funds to a trust or annuity that they say will get them a better return and qualify for something called Enhanced Pension with Aid and Attendance benefits. The scammer uses scare tactics to convince the veteran he won't have enough money to meet his needs and moves the vet's money to accounts that generate substantial fees for the scammer.

The U.S. Financial Fraud Enforcement Task Force has warned that "unscrupulous brokers claim to help veterans qualify for Aid and Attendance benefits, but in fact may cause them to lose eligibility for Medicaid services or cut off victims from their money for a long time." If you are dealing with an attorney or insurance agent, check with your state bar or state Department of Insurance to see if that person is licensed within your state. If you are dealing with a financial planner, check to make sure he or she is certified and isn't subject to disciplinary actions. Take your time and do your homework before making a decision.

Being pressured to make a decision, asked to pay fees upfront, or provided with vague answers to your questions or guarantees of Aid and Attendance benefits. Walk away if any of these things happen to you.

Pension Advances

Unscrupulous lenders sometimes target veterans in need of money with pension advances. These provide a means of turning future pension benefits into cash today. This can take the form of a loan, sale or buyout. In exchange for a lump sum payment up front, the veteran agrees to sign over future pension payments. While this may make sense under certain circumstances, there are risks and consequences that should be weighed carefully. This can include large fees, the possible inability to pay off the loan early and potential increases to interest rates. There can also be unexpected tax consequences if the upfront payment pushes you into a higher tax bracket. You may also be required to carry life insurance during the term of an agreement, an added cost. Scammers seeking to take advantage of vulnerable vets offer buyouts of only 30 to 40 percent of the value of the pension. Before even considering such an option, talk to conventional lenders who can offer better rates on short-term loans.

A deal in which you get only a fraction of what your pension is worth. If it doesn't make sense, don't take the deal.

Fake Charities

Bogus charities seeking to prey on veterans and their supporters will take names similar to legitimate ones and make reference to "military families," the "armed forces," or "veterans" in their appeals. Though there are legitimate charities supporting veterans, there are scam artists out there who are lining only their pockets. Also found in abundance are charities that rely on paid fundraisers who take a much higher percentage of donations in commissions than do regular charities. Before donating, check the charity out on or Don't be afraid to ask tough questions to fundraisers about who they work for, what they get paid, and the track record of the organization.

Organizations with names similar to well-known charities, groups with little known history or track record, organizations that pay high commissions to fundraisers, and an inability to get direct answers to your questions about the organization.

Rental Property Scams

Real estate scams target military personnel looking for housing near a base. These fraudsters pose as real estate agents and post fake ads for rental properties on websites with the promise of military discounts and other incentives. These may include pictures of real homes as an inducement to get military personnel to wire money to secure the property and pay fees and deposits upfront for a property that doesn't actually exist.

Insisting on wiring money or other payment before the renter can see the property and verify it is real.

DFAS/MyPay Phishing Scam

These identity theft scams seek to obtain social security numbers, bank accounts, and other sensitive personal information from veterans and military spouses. The scammer will pose as a member of the Defense Finance and Accounting Service or another military entity and contact the veteran through phone, email or text. In some cases, he will claim that due to computer problems your information was lost and needs to be reentered to process payments. In other instances, emails will contain links or attachments that can put rogue programs on your computer to steal passwords and account information.

Unsolicited calls from DFAS seeking private information. DFAS and other military organizations never contact veterans with a request for personal financial information, account numbers, or passwords.

Long Distance Romance Scam

These scams target women who are sympathetic to people in the military through online dating and social media websites. The scammer will pose as someone in the military and post fake photos, create a bogus identity, and build an online relationship with his victims. Eventually, he will seek to get the woman to send him money, claiming he needs it to pay medical bills, tuition costs, or other expenses. Use online tools to verify the person is real.

Anyone you have never met asking you to send money.

Debt Collection Imposter Scam

Scammers posing as debt collectors will contact military personnel and seek to collect on a non-existent debt. These grifters are aggressive and may threaten you with arrest or contacting your superior officers. If you get such a call, hang up. If they persist, contact the Federal Trade Commission. If you have reason to believe the debt could be legitimate, ask the debt collector to provide written verification, which is required by law. Do not send money without proof that the debt is real.

Aggressive, threatening behavior or asking for written verification that the debt collector refuses to give out.

Credit Monitoring Scam

These scams target active duty military personnel who are being deployed. The scammer will call up and offer to monitor your credit, supposedly to protect you against identity thieves during your deployment. In reality, they use your credit information to make charges in your name.

An unsolicited call offering such help or being asked for a fee to do so. Getting a call like this should put you on alert. If you are being deployed and won't be using your credit cards, all you have to do is put an active duty alert with one of the three major credit reporting agencies. That agency will contact the others.

Unethical Lending Practices Affecting Veterans

It's easy to point to someone who commits fraud and say what they did is illegal. But there are other lenders who operate in gray areas. Perhaps they use misleading ads and high pressure sales techniques to push pricey products. Though what they do may be within the letter of the law, they prey on military personnel to entice them into buying prohibitively expensive financial products. Before entering into a financial agreement, be sure to shop around, do your homework, and research the lender through the Better Business Bureau, your state department of consumer affairs, and the social media rating sites.

Unscrupulous Auto Lenders

Unscrupulous lenders will target military personnel because they know they have regular paychecks., For some junior servicemembers, these are the first regular paychecks they've ever received: this makes them especially vulnerable to credit scams and unethical lending practices.

Unethical auto lenders use a long list of deceptions to overcharge military personnel and ensnare them in bad deals. In recent letters to Congress and the U.S. Treasury Department, military officials seeking government action documented a string of common abuses. These include:

  • Bait and switch tactics
  • Discriminatory lending
  • Packing loans with items whose price tag bears little or no relationship to their actual costs or value.
  • Falsifying loan applications or other documents
  • Failure to pay off liens on trade-in vehicles leaving the service person unaware that they not only had new car payments to make, but old ones as well.

One common problem is that enlisted people will make buying a car a top priority once they reach their first duty station, but car dealers and lenders push them to buy new cars rather than affordable used ones. They may refuse to give them a loan for a used vehicle or charge exorbitant rates for such loans. Servicemembers may take on more debt than they can afford and then are then saddled with ongoing financial problems.

Before Buying a Car


Understand what you can afford


Shop around for the best price


Research dealers before doing business by checking the Better Business Bureau, Yelp and other forums.


Walk out of a dealer if you feel you are being pressured to make a purchase.

Unscrupulous Student Loan Servicers and Colleges

After completing their military service, some veterans will choose to attend college or career school. However, some student loan services or for-profit colleges may use unethical recruiting and marketing tactics.

For-profit and other online schools often target veterans because of the benefits they receive through the GI Bill. Some of these schools charge as much as four times the price of a community college and often have poor graduation and job placement rates. In an effort to crack down on such abuses, government regulations were put in place that require for-profit schools to get at least ten percent of their revenue from sources other than Title IV student aid. GI Bill funds, though, do not fall under Title IV, so these schools aggressively seek out vets.

Here are some precautions to take when choosing a school or shopping for a loan:


Avoid Becoming a Target

Shred everything you dispose of with your personal, financial, or medical information.

Protect your personal information. Government agencies and legitimate companies don't ask for information over email, phone, or text.

Place a year-long active duty alert on your credit card if you are being deployed and won't be using your credit cards. You can renew the alert if necessary after one year.

Avoid making payments with wire transfers or other non-refundable or non-traceable instruments.

Research businesses you are dealing with to see if there are complaints against them and what people who have done business with them have to say. You can find out a lot with a simple Internet search.

You've Been Targeted: What Next?

Your Action Plan

Here is a list of items to remember as you start a new job:


Ask questions without fear. If someone is trying to raise money for a charity, find out how much of your donation will actually go to the cause as opposed to the fundraiser, marketing, or administration.


Report identity theft, fraudulent charges to your credit or ATM card, or scam if you become a victim of one. Notify the police, your bank, and any appropriate federal or state agencies.


Verify a person is who he or she claims to be. Many scammers will tell veterans they too served to create a sense of connection. Don't be afraid to ask for proof.


Hang up the phone if you get a call from someone claiming to be from a government agency or financial institution asking you to provide personal financial information.


Walk away from a deal if is it sounds too good to be true and the business person you are dealing with refuses to put it in writing.

Expert Q&A


Brandon Robinson is a Marine Corps veteran, elder law attorney and Elder Consumer Protection Fellow at the Center for Excellence in Elder Law at Stetson University College of Law in Gulfport, Florida.


Resources for Military Families and Servicemembers

Below is a list of resources for veterans and military families looking for financial resources and ways to avoid being scam victims.

The Office of Servicemember Affairs
A division of the Consumer Financial Protection Bureau, this office works on consumer financial challenges affecting servicemembers, veterans and their families through education, monitoring of complaints and coordinating with other federal and state agencies on military consumer protection measures.

Military OneSource
Military OneSource, funded by the Department of Defense, offers a section on personal financial management and taxes with many resources tailored to the needs of servicemembers, military families and service members.

Federal Trade Commission
The Military Protection page of the Federal Trade Commission website provides information on how to be a smart consumer and avoid fraud.

Military Consumer
Military Consumer, an initiative to empower active duty and retired servicemembers, military families, veterans and civilians in the military community, provides free resources as the first line of defense against fraud and to help military consumers make better-informed decisions about managing their money.
The U.S. Department of Veterans Affairs section of the website provides easy access to information and links to a variety of programs tied to benefits for veterans.

About MoneyGeek Team

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The MoneyGeek editorial team has decades of combined experience in writing and publishing information about how people should manage money and credit. Our editors have worked with numerous publications including The Washington Post, The Daily Business Review, HealthDay and Time, Inc., and have won numerous journalism awards. Our talented team of contributing writers includes mortgage experts, veteran financial reporters and award-winning journalists. Learn more about the MoneyGeek team.