Servicemembers and veterans have long been prime targets for fraud, but recent warnings have highlighted a specific type of scam that could take advantage of those facing financial hardship by wiping out their future benefits.

Benefits buyout scams take many forms but follow a similar approach:

• Scammers identify veterans who are receiving VA disability compensation, a pension, or other earned benefit.
  
  
• They reach out via phone call, email, text, or social media offering to provide a lump sum in exchange for some or all of the veteran’s future payment.
  
  
• They use common scam tactics to encourage the veteran to sign over their benefit, from false urgency to fake business names (often appearing to be “veteran-friendly” or linked with the VA or other federal benefit providers).

[RELATED: Bipartisan Bill Takes Another Step Toward Protecting Veterans from Predatory Claims Companies]

Once a deal is reached, veterans could end up receiving 40% or less of their earned benefit at best, according to the Better Business Bureau. At worst, scammers could link additional purchases to the deal – life insurance plans, for instance – or fail to inform veterans of key financial details: An inability to cancel or shorten the deal, for example, or the need to pay taxes on the lump sum (often at a higher tax rate).

The National Council on Aging recently highlighted buyout scams as part of its online advice for veterans. Arizona’s attorney general warned her state’s veterans about the scams, and similar warnings are available via other states and nonprofit groups.

[MOAA MEMBER BENEFIT: Better Business Bureau Institute for Marketplace Trust]

Stopping the Scam

Unsure whether a buyout offer is too good to be true? Consider these five tips:

1. Be Cyber-Aware. The VA and other federal agencies will not reach out via unsolicited emails, text, or social media messages. Be wary of any messages through these mediums from financial outlets, especially if they have misspelled words, old or broken logos, or return addresses that don’t match the sender.
   
   
2. Start From Scratch. Unsure whether that email is legitimate or that phone call is really from a trusted financial provider? Find contact information on the provider’s official website and reach out with your questions. Don’t click links or return texts without due diligence.
   
   
3. Pass on Some Payment Types. Scammers prefer wire transfers, gift cards, cryptocurrency, and other types of payment that can be nearly impossible to track.
   
   
4. Avoid Redirect Requests. If you’re asked to move money into certain accounts to make you eligible for a larger VA payment, or to sign over a payment directly to a financial agent as part of a buyout, walk away.
   
   
5. Take Your Time. Scammers rely on urgency to cloud decision-making. If a deal comes with a deadline, it’s a huge red flag.

For more advice on avoiding scams, visit MOAA’s Scam and Fraud Prevention Resources page.