Why army veterans are becoming a prime target for financial frauds

Iran's Supreme Leader Ali Khamenei calls for regulation of cyberspace

As revered and respected India’s defence forces are for their valour and courage, a disturbing trend is observed. A growing number of serving and retired defence personnel are becoming targets of financial fraud.

The most common question that arises is why veterans are so vulnerable.

In my view some of the major reasons are psychology and a lack of formal financial education. In my 23 years of service, I was trained to have a strong sense of duty and loyalty. I have almost never questioned the authorities on any data or orders given to me. While this quality is appreciated in the services, ex-servicemen tend to carry on with this quality even when they retire.

Additionally, during service, officers and jawans have limited exposure to financial education. Once they return to civilian life, they may be unaware of the complexities of modern financial markets and unconventional investment avenues, making them easy targets for fraudsters.

Also see: The great, big WhatsApp stock market scam and how to avoid it

Let’s understand the different ways in which armed forces’ personnel fall prey to frauds and what you could do to avoid them.

Cyber crimes

The most common type of fraud affecting veterans is cybercrime, like phishing scams, identity theft, and online scams.

In the first week of May, an army veteran in Pune was defrauded of Rs 3.1 crore by individuals impersonating as police officers. The victim was coerced into downloading a video calling application, which led to a series of manipulative tactics, including threats of a CBI investigation and false claims of a national security issue. The victim was made to transfer Rs 3.1 crores to accounts based at Uttar Pradesh,Rajasthan,Tamil Nadu and West Bengal. The victim lodged an FIR at the Cyber Crime Police station at Pune. The fraudsters played on the veteran's sense of duty and fear, ultimately leading to a significant financial loss.

Investment frauds

Investment fraud is another scam. Promised extraordinarily high returns, veterans often invest their life savings, only to lose everything.

The ongoing bull market in India has further fuelled such fraudulent schemes, making it essential for veterans to remember that equity markets do not and cannot assure returns. Yes, you have a chance to make high returns, commensurate to the risks you take, but that also means your corpus can go down in falling markets. Only if you are patient and stay invested for the long term, your chances of making losses go down.

The Pune police booked a businessman and six others on the charges of duping 262 investors mostly  ex servicemen of Rs 26.41 crores in a share trading scam between 2020 and 2024.The fraud came to light after the share trading businessman ,also an ex serviceman ,refused to pay the promised returns to the investors, shut down his office on BT Kawade road in Mundhwa and fled.

Loan and charity scams

These scams often prey on the goodwill and trust veterans place in organisations claiming to support them. On a number of occasions one receives messages on WhatsApp and social media asking for monetary help to help war widows etc. Since the services is like a family one doesn’t think twice before donating for such causes. The realty however, is that the Army never encourages such contributions and in fact has been at the forefront in donating during various national calamities.

How to avoid traps

Protecting oneself from financial fraud requires constant vigilance. Here are some essential steps:

Be wary of unsolicited offers

Whether through calls, emails, texts, or WhatsApp messages, unsolicited offers should always be approached with caution.

Use masked Aadhaar cards

Whenever possible, use a masked Aadhaar card to protect your identity.

Document security

When providing photocopies of personal documents, mention their validity and purpose to prevent their misuse.

Skepticism over high returns

Any promise of guaranteed returns above the FD rate should be treated with suspicion. Remember, there is no such thing as easy money.

Beware of fake army welfare funds

Verify the authenticity of any welfare fund claiming to support defence personnel.

Land purchases

When buying land, verify the title and seek professional help, if needed.

Also read: Armed forces personnel must secure their finances for a comfortable retired life

Stay updated

Keep yourself informed about the latest digital frauds and scams. Even popular entertainment series like Jamtara offer valuable insights into how these scams operate.

Regulated investments

Always invest through regulated entities. Investments through unregulated entities is akin to jumping out of an airplane without a parachute.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

(The author is Founder, True North Finance, a Financial and Investment Planning Firm based in Pune).