The Veterans Affairs Department and U.S. Postal Inspection Service is warning veterans of two kinds of scams which are specifically targeting former service members.
Fake charities posing as organizations that benefit the veteran population and companies claiming to offer pension buyouts are becoming prevalent and dangerous to this community, VA wrote in a recent blog post.
The U.S. Postal Inspection Service and non-profit AARP say they are noticing more fake charities using names that sound real and authentic as a ploy to convince veterans to donate. These fraudulent organizations attempt to appeal to a veteran’s sense of duty and honor when soliciting donations.
Most of these “charities” are pocketing the donations for themselves, the agencies said. One scammer operated two fake charities and pocketed the veterans’ donations, then used the personal information written on the checks to steal donors’ identifies and take more cash, according to a VA blog post.
Before donating to a charity, veterans should verify the organization’s name and do some research about their mission and reputation, the U.S. Postal Inspection Service said.
In addition, veterans should understand where specifically their donations will go and who will benefit from them. The Postal Inspection Service and VA recommend CharityWatch as a resource, which reviews charities’ financial statements and gives organizations a rating based on their transparency and spending.
Others are scamming veterans in attempt to go after their pensions, the agencies said.
For most veterans, their VA pensions are hard-fought, but the Postal Inspection Service said some fraudulent companies are offering veterans a “pension advance” or buyout. In these situations, a company offers a veteran a lump sum in exchange for a piece of all future pension payments.
Watch for scams’ high fees
Veterans might see this as an attractive option, especially if they are looking for fast cash.
But VA and the Postal Inspection Service say these schemes are typically a bust, because these companies often charge high interest rates. The Consumer Financial Protection Bureau has seen some interest rates as high as 106 percent, the agencies said.
Again, these organizations often have patriotic-sounding names and logos and sometimes claim they have been endorsed by the VA.
The Postal Inspection Service suggested veterans avoid high fees and interest rates, and that they should never sign over control of their benefits.
The U.S. Postal Inspection Service and AARP Fraud Network teamed up late last year to launch “Operation Protect Veterans,” a campaign designed to better educate veterans about possible scams and how they can protect themselves.
According to an AARP November survey, 16 percent of veterans have lost money to fraudsters, compared to 8 percent of non-veterans.
Fraudsters often like to target specific groups of people, like veterans or federal annuitants, the Securities and Exchange Commission said.
The Office of Personnel Management warned the federal workforce last year of an aggressive marketing campaign by companies offering cash payments in exchange for all or part of beneficiaries’ annuity payments.
Last summer, the SEC warned Thrift Savings Plan participants of a scam from a fake federal benefits consulting group, which created a misleading impression that it was affiliated with and approved by the TSP.