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Learn the Warning Signs of ‘Military Scams’

Your military friend or family member serves our country with integrity and honor. Unfortunately, there are scammers out there who try to take advantage of that service to cheat them and you. You can help protect your service member against military scams by learning the warning signs of schemes that target those in the military community.

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Rental Property Scams

These scams target military personnel looking for housing near a base. Scammers pretend to be real estate agents and post fake ads for rental properties on websites, sometimes promising military discounts and other incentives. They try to get service members to send them money for fees and deposits upfront – and the victim ends up with no money and no place to live.

If someone insists on receiving money or other payments before a property has been seen, it is probably a rental scam.

DFAS/MyPay Phishing Scams

These schemes try to steal a service member’s identity by getting Social Security numbers, bank accounts and other personal information. The scammer pretends to be from the Defense Finance and Accounting Service or another military group and contacts members or their spouses by phone, email or text. They may claim that due to computer problems your information was lost and needs to be reentered to process payments. In other cases, their emails contain links or attachments that can put malware on computers to steal passwords and account information.

Your service member should never give personal information on the phone – or click on links in emails – from someone they don’t know. Also, DFAS and other military organizations never ask for personal financial information, account numbers or passwords.

Payday Loans

Is your friend or family member having trouble making ends meet? If they are considering getting a short-term payday loan to tide them over, they may be setting themselves up for long-term financial trouble.

“Short-term,” “personal” or “payday” loans are unsecured loans for small amounts – generally $500 or less – that charge big interest rates and fees. (A typical two-week payday loan charging $15 per $100 borrowed equals an annual percentage rate of almost 400%.) Many payday loan companies operate online and advertise “fast cash” and “no credit required.”

Active-duty service members are protected from payday loans by the Military Lending Act, which keeps lenders from gouging military personnel with high-interest rates and fees. The MLA gives service members these rights:

  • A 36% cap on interest rates on loans of under three months.
  • A lender can’t require them to submit to mandatory arbitration or ask them to give up their rights under state or federal laws, as they can with the general public.
  • A lender can’t make them agree to a voluntary military allotment – or automatic repayments from their paycheck – for loan approval.
  • A lender can’t charge them a fee or other penalty if they pay back their loan early.

Even with these protections, your service member needs to watch out for lenders who may charge illegally high-interest rates and fees.

Loan and Credit Card Scams

Your friend or family member may be considering getting their first credit card or applying for a loan, but they have no credit record. They need to watch out for scammers who offer credit cards and loans with ads saying “Bad credit? No credit? No problem” or “We don’t care about your past. You deserve a loan.” They may also “guarantee” that they can get anyone a loan or credit card.

Here are some of the warning signs:

  • They aren’t interested in your credit history, even if you have no credit or bad credit.
  • They “guarantee” you will qualify for a credit card or loan before you apply.
  • They don’t disclose fees clearly. Legitimate lenders often charge fees, but they list them up front.
  • They say you’ve been approved, but demand a fee before you get your credit card or money.
  • They ask you to wire money or pay an individual. Legitimate lenders don’t do that. Also, don’t use a wire transfer service or send money orders for a loan.

Insurance Scams

Some insurance agents try to use high-pressure tactics to get military personnel to buy insurance they don’t need. They make phony claims about policy benefits, which are expensive and most likely unnecessary.

If your service member is considering life insurance, suggest they take advantage of Servicemembers’ Group Life Insurance, government-issued insurance that provides outstanding insurance at a low price.

Car Sale Scams

If your service member is excited about a great deal they’re getting on a new car, ask them for details. Dealers that require no credit check and offer instant approval often charge hidden fees and high interest rates that inflate the cost of a car. First- or second-time car buyers may not be aware of this.

Before your member signs a contract, urge them to comparison shop with other dealerships to make sure they’re getting a fair deal. And if they’re buying a used car, remind them to ask for its repair history and get a mechanic to look it over before purchase.

Romance Scams

Your friend or family member says they have “met someone” on a dating app. The person in the profile looks and sounds wonderful, but they are asking for money to buy a plane ticket for a visit. Is this true love or could it be a romance scam?

Scammers often post fake profiles on dating websites to attract service members. If your member responds to one of these profiles, the scammer may make advances to make them feel loved and appreciated. And then they will ask for money – usually by wire transfer or pre-paid debit card – so they can come visit, pay for a car repair or even for a medical emergency. If your service member sends money, their “sweetheart” will probably disappear, leaving them disappointed and with no chance of getting their money back.

You can help protect their heart and wallet with these tips:

  • Never send money or gifts to someone they haven’t met in person.
  • Take it slowly. Ask questions and look for inconsistent answers.
  • Check the person’s photo using a search engine’s “search by image” feature. If the same picture shows up with a different name, that’s a red flag.

If your service member suspects a romance scam, advise them to cut off contact right away. They should also notify the dating site.

Emergency/Grandparent Scams

Being in the military carries certain risks. The emergency or grandparent scam takes advantage of a family’s concern for their service member’s well-being.

In this scam a relative, usually a grandparent or aunt or uncle, gets a call from their “niece,” “nephew” or “grandchild.” They are told there has been an emergency – such as an arrest or accident – and the service member needs money quickly. In some cases, the caller claims to be from the military or an attorney, who is acting for the service member. The scammer tells the family member to send money by wire or prepaid debit cards.

If you or a family member get a call like this, resist the pressure to send money right away, even if the story sounds urgent. If you aren’t sure the person calling is really your relative, ask them questions that only your relative could answer. Then contact other family members to check on the story. Try to be certain before wiring money or using a pre-paid debit card, since there is no way to get the money back.

Other Military Scams to Avoid

There are always new scams popping up. Here are a few more:

  • Fake military charities: These prey on military families and have names that sound like real charities. They often ask for money for wounded or disabled veterans.
  • Phony debt collectors: These scammers pose as debt collectors. They contact military personnel and try to pressure them into paying debts they don’t have.
  • Credit monitoring scams: These target active-duty members who are being deployed. They offer to monitor credit and defend against identity theft, but instead they use the victim’s credit information to go on a spending spree, leaving the victim to foot the bill.

Other schemes can involve jury duty, phishing scams and others. Get the latest on scams targeting military personnel from the Military Consumer website.

Military OneSource also offers service members free access to financial counselors who understand military life. Our financial counselors can help on a range of money matters and fraud prevention. If you know someone has been scammed, urge them to file a complaint with the Consumer Financial Protection Bureau or get advice from their local legal assistance office.