Tips to Help Military Consumers Avoid Scams and Navigate Finances

By Barbara O’Neill, Ph.D., CFP®, boneill@njaes.rutgers.edu

Woman using computer
Photo by Liza Summer from Pexels

July was Military Consumer Month and the Military Families Learning Network Personal Finance team held a webinar called Helping Military Consumers Avoid Scams and Navigate Finances. Included was discussion of scams related to COVID-19, rental cars, cryptocurrencies, technology, and more with speakers from the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB).

Below are seven tips for Personal Financial Managers (PFMs), from the webinar and government agency sources, to share with military families to help them avoid scams:

  • Beware of “Cold Contacts”- Whether contact is made by phone, text, in person, or electronically, be skeptical of anyone contacting you from the “federal government.” This is often done with fraudulent income tax and “vaccine verification” scams. No government agency will call, e-mail, or text demanding personal information and/or money to get a vaccine passport, child tax credit, or stimulus payment.
  • Recognize “Red Flags” for Fraud– Examples include being asked to make payments with gift cards (this was done with some rental car scams) and with digital currency (a.k.a., cryptocurrencies), like Bitcoin and Ethereum, and being asked to wire money to a product or service ‘vendor.”
  • Beware of Common Military Scams– According to Military OneSource, common scams that affect service members include rental property scams, DFAS/MyPay phishing scams to steal Social Security and bank account information, car sale scams, romance scams, and fake military charities.
  • Avoid Common Consumer Issues– Areas of concern for military consumers noted by the CFPB include cars, credit reports (good credit is needed for security clearances), debt collection practices, payday loans, small loans (e.g., for computers, furniture, airline tickets, and car repairs), student loans, and utility bills.
  • Know the Law: SCRA– Under the Servicemembers Civil Relief Act (SCRA), interest on loans obtained prior to military service can be capped at 6% during periods of active duty so service members can focus on their military mission. In addition, active-duty service members who receive permanent change of station (PCS) orders for at least 90 days can terminate housing and auto leases without penalty.
  • Know the Law: MLA– Under the Military Lending Act (MLA), interest charged on consumer loans to active-duty service members is limited to no more than a 36% Military Annual Percentage Rate (MAPR) cap that includes finance charges, fees, credit insurance, and other add-ons. In addition, creditors cannot charge prepayment penalties or require service members to create voluntary pay allotments to obtain a loan.
  • Complain When You are Victimized– The CFPB received 40,800 complaints from service members in 2020 about consumer financial products or services. The CFPB forwards complaints to companies, with a response typically in 15 to 60 days, or to another agency that can better assist. Four categories of response are: in progress, closed with explanation, closed with non-monetary relief, and closed with monetary relief.

For further information about military scams and how to avoid them, visit the Military Consumer Blog that includes content from three Federal government agencies.