Why We Have Military Consumer Protection Month
~ By Gerald Rome, Colorado Securities Commissioner ~
July is National Military Consumer Protection Month, and for anyone who has family members in the service, or who themselves served, it’s a great time for a refresher on the scams that target veterans. Particularly for those of us who may have family members currently in the military, it’s important to be aware of the kind of scams used by those who wish to take advantage of our men and women in uniform. Service members living in Colorado or while stationed across the nation and abroad face significant demands on their time and resources. Unfortunately scam artists find service members an attractive target, precisely because they are often busy protecting our country overseas or focused on their duties here at home.
Perhaps of greatest concern are the practices that many military members carrying debt fall into: 40 percent of participants in a recent survey reported engaging in risky credit card behaviors like paying late fees and carrying a balance, and many reported utilizing “alternative” forms of borrowing such as payday lenders. These numbers are much higher for military members than for the general population, but this is no coincidence.
Many payday loan operators target military members who they know may need quick access to money for moving costs, auto loans, credit cards, or general financing. These loans often carry burdensome interest rates and unreasonable fees. Service members with such loans are often also the targets of debt collection scammers, who are trying to collect on debts that are already paid, or that exist under a legitimate company that the scammers impersonate. Military consumers should be aware of theses scams, always verify where the call is coming from, and be extremely careful when it comes to making payments for debts or loans through wiring or money transfer services.
On the investment side, unfortunately we see all too often military members who fall victim to affinity fraud, where military ties are used to commit financial fraud. You trust someone because they are in a group you identify with, and you don’t bother to check out the investment. And who would you trust more than someone you serve with. It wasn’t that long ago that we helped prosecute a case against a former Fort Carson sergeant who bilked more than $700,000 from fellow soldiers, many of whom had served with him in Iraq. When soldiers returned from Iraq and received large checks for combat pay, the sergeant convinced these soldiers to invest in his fraudulent investment program, promising 18% returns. The sergeant ended up with a 12 year prison sentence. Caution loved ones in these types of close-knit military organizations to always check out the person and the offering before handing over any of their money, even if they feel they can trust the person unconditionally.
For more great financial literacy materials and information on scams that target to military members, check out DORA’s new Military & Veterans Programs at www.dora.colorado.gov/military. And if you use social media, feel free to join us as we co-host July’s Military Chat on Twitter along with StopFraudColorado and the Federal Trade Commission on July 13th at 1:00pm MST. Just search for #MilChat and join in on what we hope will be an informative and fruitful conversation!