If you're in the military or a veteran, be on alert. You may be the focus of scammers determined to separate you and your family from your money.
The best defense? Understand how the scams work. Use the tools that help you protect your personal information. And know the laws that exist to protect you.
Scammers are targeting service members. That is one possible conclusion from a tally of Federal Trade Commission complaints where consumers reported a military connection.
What the Statistics Reveal
The numbers show a continued threat of identity theft and an array of scams along with a disproportionate risk of being targeted by foreclosure relief and debt-management scams. In 2012, there were more than 67,000 such scam and fraud complaints from military families, according to the Consumer Sentinel Network Data Book.
"A service member has a steady paycheck guaranteed by the U.S. government," says Carol Kando-Pineda, an FTC lawyer who manages the agency's outreach to the military. "That's manna from heaven for scam artists. If they can convince them to part with it, that's guaranteed money."
While the FTC says the complaints are not verified by law enforcement, the numbers indicate scammers and thieves may be taking advantage of a young and itinerant population.
"Young service members make easy prey," says consumer advocate Christopher Elliott, author of the book "Scammed." "They have a little money and a lot of trust. That makes them vulnerable."
Holly Petraeus, who heads the Office of Servicemember Affairs for the Consumer Financial Protection Bureau, notes that because younger service members are often avid Internet users, they have another prime area of exposure. "They are very confident on the Internet," she says. "It's where they grew up. It's where they live. That doesn't mean they know a scam when they see it."
Most Common Fraud Complaints
Enlisted service members accounted for 80% of the complaints filed, according to the Consumer Sentinel data, with half of that number coming through the junior enlisted ranks.
Those who identified themselves as being current or former Army accounted for 49% of the complaints, followed by Navy (21%), Air Force (19%), Marines (10%) and Coast Guard (2%). (Total equals 101% due to rounding.)
So what category are these complaints falling under? Scams and frauds with the most complaints were identity theft, debt collection, impostor scams, phony prizes and lotteries, mortgage foreclosure relief, phony check scams, and auto-related and work-from-home opportunities.
You can take all the measures in the world to safeguard your money, but if you hand the thief the key to the safe, it won't matter much.
That's what happens when you think you've received an email that says you won some lottery, sweepstakes or prize contest you never even entered. Some of the emails make over-the-top claims that you've won millions. Lest you think no one falls for these: In 2012, it was the fourth most-reported fraud targeting military members.
The typical angle with these scams is that you first have to pay a nominal fee or tax, usually via a money-transfer service, to claim your winnings.
Foreclosure and Debt Relief
Compared with the general population, more military members than civilians were targets of mortgage foreclosure relief scams. It was the sixth-highest source of complaints among military members, but 15th among the general population.
Foreclosure-prevention scams are aimed at those in the worst possible position to be scammed. Crooks claim they can help homeowners halt a foreclosure and ask for a payment upfront to get the job done. "You're paying people who don't have the experience that they claim or don't do the work," Kando-Pineda says. The result could be the loss of much-needed cash and a higher likelihood of losing the home.
Despite a concerted effort by the military to introduce financial education, Kando-Pineda says there appears to be a continued lack of awareness about special protections intended to shield service members from predatory lenders.
"Service members have very specific protections" from that sort of lending abuse, Kando-Pineda says, in reference to the Servicemembers' Civil Relief Act. "You would think, if anything, they would have fewer foreclosure complaints than the civilian population."
According to the law, many protections involve time extensions for those on active duty -- protecting them from foreclosure and eviction, and allowing more time to file lawsuits.
The law also caps interest charges on consumer debt incurred prior to military service at 6% -- with anything above that forgiven, not deferred. Service members can seek help from their state attorney general's office, which may have someone familiar with military issues.
Tips to Help Avoid Fraud
Tom Shaw, USAA's vice president of enterprise financial crimes management, says a series of simple steps will go a long way to help members not fall prey to scammers.
"Take proactive measures to shield personal information," he says, including enrolling in credit monitoring services like CreditCheck Monitoring® from Experian.See note 1
Some actions you can consider include:
Monitoring financial statements and regularly checking credit reports for any questionable activity.
Placing an active-duty alert on the credit report, which requires lenders to take extra steps to confirm your identity before extending credit.
Protecting your Social Security number and only providing it when absolutely necessary to trusted merchants and lenders.
Establishing a durable power of attorney before you deploy. This should enable a trusted family member or friend to manage your financial affairs (choose wisely, as that individual holds immense power over your affairs if you become incapacitated).
"Many people often overlook securing their mobile devices," Shaw says. "I recommend always using a password or PIN to restrict access to your phone when you're not using it.
"In addition, many mobile devices have a wipe function that can be triggered by multiple password failures. Some devices can also be wiped remotely if stolen or lost.
"Keep your computer current with anti-virus, anti-spyware and firewall software," he says. USAA members can download Trusteer Rapport for free. This software is designed to protect you from malware and account takeover when logging on to usaa.com, as well as other websites, when you are concerned about security.
With the number of mobile devices and social networks, you should take advantage of privacy settings and limit the amount of personal information you post online.
"Be careful what and with whom you share on social media. Those who wish to be your friend may not always have your best intentions at heart," Shaw says.
Unfortunately, Shaw says, many scammers pretend to represent organizations that are looking to provide financial help to those associated with the military. Double-check any solicitations you receive. Make sure the organization is legitimate before making any donation.
Consider adding credit monitoring and identity theft protections from USAA.
Safeguard Your Money
Identity theft and debt collection scams lead the list of frauds among enlisted service members. What measures can you take to safeguard your money?
Watch Out for These Scams
The Scam: Impostor Scams The Angle: Con artist, claiming to be someone you know or trust, encourages you to send money or share personal information.
The Scam: No Way to Find a Job The Angle: An online job ad dangling the idea military members will receive special treatment. Upbeat emails may ask for additional personal information and request payment for a background check.
The Scam: Taken for a Ride The Angle: Car dealer offers special deals for military members with excessive loan terms and high interest rates; makes false claims about auto warranties.
The Scam: Foreclosure Relief The Angle: The entity makes false promises to save your home from foreclosure in exchange for money.