CO used to use a generic code for Veterans Advantage which left a lot of room for abuse. CO changed their system a few months ago to require an individual user code, which is issued to each member by VA.

CO Insider had posted something a while back that VA actually contributed to the discount. WHile I don't know what CO provides to VA, now that the individual number is entered I'd expect that they get a file with the Name, number, and other information to match to their records. I'd expect that VA and CO would follow up on fraudulent use.

My recommendation is not to use it if you're not entitled to it.