Protecting Our Troops: Experts Call for Action Amid Rising Military Financial Struggles

By Liam Gibson

A recent study from the Consumer Financial Protection Bureau (CFPB) shows reports of financial hardship from U.S. military personnel have risen in recent years. 

The Office of Servicemember Affairs’ annual report crunches the numbers on all financial complaints submitted to the Bureau by service members, veterans, and military families throughout the year. It provides an alarming overview of the national defense community’s economic well-being. 

Service members submitted approximately 84,600 complaints in 2023, a 27% increase across all major products from 2022 and 98% compared to 2021. This includes credit or consumer reporting, debt collection, credit cards, checking or savings accounts, and mortgages.

Last year wasn’t a one-off, either. This negative trend has been building for over a decade. Since the CFPB began accepting consumer complaints in 2011, complaints from service members have steadily increased with every passing year.

Financial advisors explain why finance is becoming an uphill battle for American soldiers.

Unique Vulnerabilities

Military life brings many unique vulnerabilities that scammers can exploit to defraud service people of their hard-earned cash. 

According to an online Defense Department resource, common scams include fake military charities, phony debt collectors, credit monitoring scams, and fraudulent use of the Military OneSource names.

Mike Hunsberger, owner of Next Mission Financial Planning, primarily works with military and veteran clients. “As a financial advisor who primarily works with military and veteran clients, this report doesn’t surprise me,” Hunsberger laments. “Military members have long been targeted by salespersons and scam artists,” he says. “This is because military members are often young, have a stable income, and will make good on contracts because they don’t want financial problems to affect their security clearances.”

Vets in the Crosshairs

Older veterans have become prime targets for scammers and fraudsters, and 2023 saw a significant uptick. According to the CFPB, older veterans or senior service members submitted nearly 9,300 complaints — a 17% jump from the previous year.

Of particular concern are the complaints involving money transfer services. Nearly half (49%) of these were frauds or scams.

Many elderly vets fall prey to deceptive schemes operated by unaccredited veterans benefits claims agents, who charge exorbitant fees for illegitimate assistance with claims. Sadly, veterans’ later years can be fraught with the financial threats such unscrupulous actors pose.

Of all the worrying developments, the rise in scams targeting vets alarms Hunsberger the most. Ironically, this may be linked to recent regulatory changes designed to better support former service members. 

“The expansion of Veterans Affairs benefits in recent years increased the number of people that could be targeted because they could promise veterans to help them get more VA money,” says Hunsberger. “Unfortunately, many of these agents charged the veterans when they could have used military service organizations to help file for free.”

Credit reporting issues remained the top complaint category. In 2023, 55% of service member complaints were about credit or consumer reporting. Credit issues increased roughly one-third from 2022, noting a substantial problem for military personnel. Debt collection was a distant second, representing just 14% of the total. 

Tyranny of Distance

Connecting with federal student loan servicers can be a significant challenge for service members and their families stationed around the world. 

Most loan servicer lines operate standard weekday hours, but coordinating these calls can be tricky with over 200,000 service members deployed worldwide and time zones spanning up to 12 hours.

Take East Asia, for instance: a service member there would need to call between 9 p.m. and 9 a.m. local time to reach a loan servicer during business hours. The time difference can make calling in during the day impractical, especially when juggling demanding schedules. 

The report also provides coverage of which regions the U.S. military was hit hardest by financial issues. 

In 2023, the states with the highest rate of service member complaints (per million people) were Georgia (684), Hawaii (549), South Carolina (548), and Nevada (518). Meanwhile, the states with the lowest complaint rate were North Dakota (76), Massachusetts (82), New Hampshire (83), and Wisconsin (92).

Eyeing the Horizon

Asked how soldiers can better protect themselves, Hunsbereger points to some underutilized resources.

“I think there are increasing opportunities for military and veterans to find the help they need through resources on military installations or to find fiduciary financial advisors who know military life and clients at the Military Financial Advisor Association (MFAA), or by looking for a Military Qualified Financial Profession,” says Hunsberger, who is a member of the MFAA. 

Whether serving stateside or abroad, U.S. military personnel deserve greater financial well-being. By staying aware of targeted scam tactics, hiring an experienced financial advisor, and raising public awareness of their challenges, soldiers and veterans alike can combat the rising tide of financial battles they face. 

Financial experts urge more support through military resources and knowledgeable financial advisors to reverse these troubling trends.