Pension Advance Scams Target Senior Citizens and Military Veterans
Pension Advance Scams Target Senior Citizens and Military Veterans

In recent years, there have been numerous types of scams and abusive practices aimed at people who possess long-term assets but are financially strapped in the short run. The goal of such schemes is always to siphon money from the victim. One example of this class of scam is the fee-laden reverse mortgage, which strips equity from residential properties. Another common form is the payday loan, in which lenders charge unconscionable fees and interest on short-term loans.

While much work remains, private lawsuits and government-enacted remedies that have succeeded in combating some of the abuses of reverse mortgages and payday lenders; new schemes, however, crop up constantly. One of the most tragic of the new schemes is the “pension advance” scheme, in which an opportunistic company preys on vulnerable retirees who have valuable pensions. In many, many cases, the pensioners have no other source of income for their retirement. Pension advance companies profit by convincing pensioners to sign over the rights to their pensions in exchange for what is in many cases a pittance of liquid funds. The interest on such transactions can be as high as 100 percent.

Sadly, military retirees and recently returned veterans have also become a prime target of the pension advance industry. Since federal laws restrict the transfer of some military pensions, pension advance companies have been known to encourage military pensioners to set up bank accounts through which they will funnel pension funds in order to claim that they are not directly receiving the victims’ military pension payments.

As with most fraud schemes targeting senior citizens and retirees, the pension advance schemes are founded on non-disclosure of key information as well as the use of misleading information. Many victims do not know until it is too late that they have entered into a complex financial transaction that has permanently deprived them of retirement income they’d worked for decades to earn. Indeed, the victim is frequently led to think that he or she is agreeing only to a short-duration loan to temporarily get them through a rough patch, when in fact the transfer may ultimately become permanent. Lastly, to add insult to injury, in some cases the victim is forced to purchase expensive insurance policies that name the pension advance company as the sole beneficiary of the policy.

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Topics: Elder Abuse


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