While most profess respect for veterans, there are also those who prey upon them. There are two main reasons veterans are so often targeted by scammers. One is that they are a conduit to federal money that can easily be tapped. The second is that veterans are often vulnerable. One aspect of this vulnerability is, ironically, financial. While veterans have access to federal money, they are often in short term financial need. Another aspect of this vulnerability is inexperience. This can be financial inexperience—someone who has spent years in the military may be unfamiliar with the workings of the civilian economy. Another example is higher education—veterans are often the first in the family to attend college and can be targeted by for-profit colleges that are essentially scams to direct federal money into private pockets.
One recently exposed strategy of targeting financially vulnerable veterans is the practice of paying a veteran a lump sum in return for all or some of their monthly benefits check for a length of time. There are two main problems with this practice. The first that it targets veterans who are in financial difficulties and need money now (for example, to buy a car so they can get to their job). The second is that there are extremely high commissions (up to 50%), hidden fees and interest rates of up to 240%. As an illustration, one veteran received $2,700 to put a down payment on a car but ended up owing $27,000. Targeting the vulnerable and engaging in such predatory financial practices would be bad enough; going after veterans merely makes it worse. There is also the concern that these exploiters are scamming federal money—something that should enrage those who are outraged when they hear tales of welfare fraud.
It could be objected that these practices are simply how the free market operates. If someone freely gives informed consent to agreement and they fail to consider the consequences, then what happens is on them. They are not forced into the agreement and the purpose of business is t maximize profit, not to worry about whether veterans are being driven into debt and bankruptcy.
The easy an obvious response is that they are not freely giving informed consent. As noted above, veterans typically accept such agreements when they are in times of financial difficulty—they are effectively coerced into desperate actions. They are also not informed. As noted above, veterans (like many non-veterans) are often ill-prepared to deal with financial matters and many of the details of the agreements are hidden from them. As such, these agreements are often entered under coercion and in ignorance. Naturally, if a financially well-off veteran who fully understood everything wanted to engage in this sort of agreement, then the consequences would be on them. But a well-off and informed person would not engage in such an agreement. As such, this practice is wrong.
Assuming that such agreements are wrong, the practical matter is what to do about it. One thing that is already being done is that lawsuits are being brought against those running these schemes. Unfortunately, the scammers can easily operate online and simply create a new company when the old one is shut down. There are also laws being proposed against such practices, but if they are not federal, then the scammers can simply operate out of a scam friendly state.
There are also possible solutions that would address the factors that make veterans prey. The first is to provide veteran’s with basic training in finance and scam recognition. The challenge is to make the training non-boring and effective; otherwise it will just be a box-check sort of thing. The second is to do more to address the financial vulnerability of veterans. One option would be to have non-predatory versions of these payments that allow veterans to tap into their long-term benefits to address short-term needs without getting into financial ruin. A better option would be to address what gets veterans (and non-veterans) into these desperate situations. After all, if veterans were not in dire financial situations, they would not need to seek such desperate and harmful “solutions.”