Key Takeaways

  • Veterans need to be aware of the “benefits buyout” scam.

  • Scammers will call an unsuspecting Veteran asking if they’d be interested in having their VA benefits “bought out” for one lump sum payment.

  • Veterans should learn about this and other scams before acting on any offer.

According to the Federal Trade Commission, 163,000 fraud reports have been filed by military retirees and Veterans since 2015. Of that total, 12% have come from retirees and Veterans reporting a financial loss from the fraud. And the most significant stat: the median loss for military retirees and Veterans is $950, compared to $775 for active duty servicemembers and $658 for civilians.

One of the latest scams impacting Veterans?

Benefits buyout scams where Vets are receiving calls from scammers with a tantalizing offer: receive a lump-sum payment immediately if they sign over their rights to future disability/pension payments from the Department of Veterans Affairs (VA). But, that siren’s call of quick/easy money can prove to be very costly.

Operation Protect Veterans (OPV), a joint crime prevention campaign created by the U.S. Postal Inspection Service and AARP, advises Veterans that in these turbulent economic times, they need to carefully examine offers like this and others that scammers try to use.

So, what are the details of the benefits buyout scam?

A scammer or unscrupulous business will call a Veteran and ask them if they’d like to receive an upfront, lump-sum cash payment in exchange for signing over future pension/or disability payments. What the scammer doesn’t say is that there are plenty of strings attached. For starters, many scammers will not let Veterans terminate the deal early—they’re essentially “locked in.” They may also require the Veteran to buy a costly life insurance policy, which guarantees payment in case the Veteran should pass away.

These pension advances could also have serious tax implications for the Veteran, with the lump sum causing them to be placed in a higher tax bracket. This temporary boost in income may also end up disqualifying the veteran from other needed government benefits.

OPV advises all Veterans considering a benefits buyout to do the following:

  1. Don’t get pressured into making an immediate decision. NEVER sign/agree to a benefits buyout contract before seeing it in writing.
  2. Ask a trusted friend, family member or Certified Financial Planner to review the offer before signing.
  3. Check out the company/individual making the offer. See if they are licensed in that state to offer financial services, check with the Better Business Bureau, etc.
  4. Confirm that the person/company making the offer is a VA-accredited representative.
  5. Consider taking a loan from a reputable financial institution/lender, like a credit union or bank, instead one of these shady offers.

Veterans have resources they can access if they think they have already been scammed. They should file a report with:

While Veterans may feel ashamed for being scammed, they shouldn’t let that stop them from helping other Veterans by reporting it. And, for more information on other scams targeting Veterans, visit