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Veterans targeted by phone scams, pitches for benefit buyouts

The Enterprise - 11/20/2017

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.

Scam warnings are being conveyed by phone, email, social media and a new website.

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.

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.

Exchanging future pension payments for upfront cash turns into an expensive way to borrow in the form of undisclosed effective interest rates or finance charges on lump-sum advances on pensions can range between 25 percent and 47.18 percent.

Veterans are warned to watch out for callers who are pretending to work for the VA and then ask for Social Security information over the phone. Caller ID can be spoofed to look real.