[Senate Hearing 118-159]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 118-159

                     VETERANS CONSUMER PROTECTION:
                  PREVENTING FINANCIAL EXPLOITATION OF
                      VETERANS AND THEIR BENEFITS

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                             APRIL 19, 2023
                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
       
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        Available via the World Wide Web: http://www.govinfo.gov
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                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
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                 SENATE COMMITTEE ON VETERANS' AFFAIRS

                     Jon Tester, Montana, Chairman
Patty Murray, Washington             Jerry Moran, Kansas, Ranking 
Bernard Sanders, Vermont                 Member
Sherrod Brown, Ohio                  John Boozman, Arkansas
Richard Blumenthal, Connecticut      Bill Cassidy, Louisiana
Mazie K. Hirono, Hawaii              Mike Rounds, South Dakota
Joe Manchin III, West Virginia       Thom Tillis, North Carolina
Kyrsten Sinema, Arizona              Dan Sullivan, Alaska
Margaret Wood Hassan, New Hampshire  Marsha Blackburn, Tennessee
Angus S. King, Jr., Maine            Kevin Cramer, North Dakota
                                     Tommy Tuberville, Alabama
                      Tony McClain, Staff Director
               David Shearman, Republican Staff Director

                            C O N T E N T S

                              ----------                              

                             April 19, 2023

                                SENATORS

                                                                   Page
Hon. Jon Tester, Chairman, U.S. Senator from Montana.............     1
Hon. Jerry Moran, Ranking Member, U.S. Senator from Kansas.......     2
Hon. Marsha Blackburn, U.S. Senator from Tennessee...............    12
Hon. Margaret Wood Hassan, U.S. Senator from New Hampshire.......    14
Hon. John Boozman, U.S. Senator from Arkansas....................    15
Hon. Richard Blumenthal, U.S. Senator from Connecticut...........    17
Hon. Mazie K. Hirono, U.S. Senator from Hawaii...................    18
Hon. Angus S. King, Jr., U.S. Senator from Maine.................    22
Hon. Dan Sullivan, U.S. Senator from Alaska......................    22

                               WITNESSES

David Barrans, Chief Counsel, Benefits Law Group, Office of 
  General Counsel, Department of Veterans Affairs; accompanied by 
  John Boerstler, Chief Veterans Experience Officer, Veterans 
  Experience Office..............................................     3

James Rice, Office of Servicemembers Affairs, Consumer Financial 
  Protection Bureau..............................................     5

Monica Vaca, Deputy Director of the Bureau of Consumer 
  Protection, Federal Trade Commission...........................     6

                                APPENDIX
                          Prepared Statements

David Barrans, Chief Counsel, Benefits Law Group, Office of 
  General Counsel, Department of Veterans Affairs................    31

James Rice, Office of Servicemembers Affairs, Consumer Financial 
  Protection Bureau..............................................    39

Monica Vaca, Deputy Director of the Bureau of Consumer 
  Protection, Federal Trade Commission...........................    54

                        Questions for the Record

Department of Veterans Affairs response to question asked during 
  the hearing by:

  Hon. Dan Sullivan..............................................    73

Department of Veterans Affairs response to questions submitted 
  by:

  Hon. Joe Manchin...............................................    74
  Hon. Kyrsten Sinema............................................    79

Consumer Financial Protection Bureau response to question 
  submitted by:

  Hon. Tommy Tuberville..........................................    87

                       Statements for the Record

Hon. Kyrsten Sinema..............................................    93
The Department of Justice (DOJ)..................................    94

 
                     VETERANS CONSUMER PROTECTION:
                  PREVENTING FINANCIAL EXPLOITATION OF
                      VETERANS AND THEIR BENEFITS

                              ----------                              


                       WEDNESDAY, APRIL 19, 2023

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 3:46 p.m., in 
Room SR-418, Russell Senate Office Building, Hon. Jon Tester, 
Chairman of the Committee, presiding.

    Present: Senators Tester, Brown, Blumenthal, Hirono, 
Sinema, Hassan, King, Moran, Boozman, Sullivan, and Blackburn.

            OPENING STATEMENT OF CHAIRMAN JON TESTER

    Chairman Tester. Good afternoon. I want to call this 
hearing to order. Today we are going to discuss a critically 
important topic and that is protecting veterans' hard-earned 
benefits from frauds and scams.
    Unfortunately, there are a lot of bad actors looking to 
prey on these benefits, and we need the right tools in place to 
hold them accountable. This topic is particularly important as 
the PACT Act is being implemented, which will ultimately 
provide a huge expansion of veterans' benefits in the decades 
to come. This landmark legislation added 20 new presumptive 
conditions for burn pits and toxic exposures, and two 
additional conditions for Agent Orange. As of March 26th, the 
VA received more than 422,000 PACT claims. It has completed 
more than 191,000 of those claims, 80 percent of which have 
been granted.
    As a result, a historic number of veterans are receiving 
disability benefits, and unfortunately more and more bad actors 
and scammers are seeing these veterans as a payday. While 
veterans should never have to pay to get the benefits they have 
earned, we are faced with the reality that many veterans are 
choosing to pay for assistance. Time and time again we have 
heard truly awful stories about how bad actors have promised 
veterans assistance, only to have those veterans hounded by 
for-profit companies and third-party debt collectors about 
past-due bills incurred because a veteran paid for their so-
called expertise.
    One Montana veteran reached out to his local VSO for help 
after working with a claims consulting group. The consultant 
charged the veteran an upfront fee, sent him to a doctor who 
provided a nexus opinion for sleep apnea connected to his knee 
condition. He provided the veteran no tangible help in moving 
his claim forward. We have also heard about consultants in 
Billings, Montana, charging elderly veterans and their spouses 
$800 just to talk with them about possible pension claims. I am 
sure these are examples that go throughout the United States.
    Now we have fought back against this behavior before. Back 
in 2019, I introduced a bill to go after pension poachers 
following a different case in Montana, a so-called veteran 
assistance company, who was stealing a widow's pension after 
she turned to them for assistance. There has got to be a 
certain place in hell for these people.
    And we passed provisions under my Veterans Pension 
Protection Act of 2019 into law. However, it is clear that 
effort did not go far enough. I expect to hear from the VA 
today about its work to continue to educate enforce and ensure 
veterans are not being financially exploited when it comes to 
their benefits.
    But financial exploitation is not limited to VA benefits 
claims. Identity theft, telemarketing scams, deceitful mortgage 
practices, and various cybercrimes all target veterans. And to 
the other folks on the panel I want to hear about any and all 
legislative fixes to hold bad actors accountable.
    With that I will turn it over to my good friend and expert 
man of knowledge with veterans affairs, the Ranking Member, a 
guy that comes from the great State of Kansas, and a long line 
of great Kansas Senators, Senator Moran.

            OPENING STATEMENT OF SENATOR JERRY MORAN

    Senator Moran. Good afternoon, everyone. I am pleased to be 
with you. Mr. Chairman, thank you. I thank our witnesses for 
being here today, and I am interested to hear the discussion of 
how we can work together to better protect our veterans and 
their hard-earned benefits.
    Veterans, unfortunately, can be preyed upon by a multitude 
of scammers, including fraudulent educational institutions when 
veterans are using the GI Bill, misleading financial 
institutions when refinancing their homes, or those trying to 
exploit veterans during the disability claims process. No one 
should be taken advantage of when using government services, 
but particularly those men and women who served our Nation.
    I want to protect veterans from bad actors, and doing so 
means your organizations need to have clear guidelines to 
distinguish from those actors who have legitimate organizations 
and purposes.
    Veterans deserve to have choices in how to use their 
benefits that they have earned through their service. What 
works best for one veteran may not work best for another. I am 
committed to working with the Chairman, with Senator Boozman, 
and my other colleagues to find a path forward on holding bad 
actors accountable while also ensuring that we are striking a 
good balance in improving the system and still allowing 
veterans appropriate choices and options.
    We must work to increase education and accountability so 
that veterans can advocate for themselves and make informed 
choices when seeking a home loan, a disability rating, or a 
degree. I look forward to hearing from all of you today. I am 
also pleased that the Veterans Experience Office is here, along 
with the VA Office of General Counsel to discuss the work which 
the Administration is doing to better educate veterans and 
their families on how to access VA benefits and stay safe from 
scammers.
    At the end of the day, every one of us want to help 
veterans protect themselves, their families, their benefits, 
and their livelihoods from making sure that they continue to 
have all the choices they are entitled to under the law.
    Again, I thank you all for being here, and Mr. Chairman, I 
turn the table back over to you.
    Chairman Tester. Thank you, Senator Moran.
    Today's hearing includes several agencies tasked with 
protecting veterans and enforcing penalties against those who 
play outside of the rules. From the VA we have David Barrans, 
Chief Counsel of the Benefits Law Group within the Office of 
General Counsel. He is accompanied by John Boerstler, the Chief 
Veterans Experience Officer. From the CFPB we have James Rice 
from the Office of Servicemembers and Veterans Affairs. From 
the FTC we have Monica Vaca, the Deputy Director of the Bureau 
of Consumer Protection. DOJ was unable to attend this hearing 
but they did submit written testimony.

    [The Department of Justice (DOJ) testimony appears on page 
94 of the Appendix.]

    We will start with Mr. Barrans from the VA with his opening 
statement, and then we will go to Mr. Rice from the CFPB, and 
then Ms. Vaca from the FTC.
    Mr. Barrans, you have the floor.

                   STATEMENT OF DAVID BARRANS
                 ACCOMPANIED BY JOHN BOERSTLER

    Mr. Barrans. Thank you. Good afternoon, Chairman Tester, 
Ranking Member Moran, and distinguished members of the 
Committee. Thank you for the opportunity to testify on VA's 
efforts to protect veterans from fraud, scams, and predatory 
practices. I am representing VA today along with John 
Boerstler, Chief Veterans Experience Officer, who leads the 
Veterans Experience Office, or VEO, as well as VA's Veteran 
Scam and Fraud Evasion Initiative, or VSAFE.
    Our Nation's heroes are being financially exploited through 
predatory practices and fraudulent schemes. They are often 
viewed as an attractive target because of their potential 
eligibility for Federal benefits related to their service. 
These schemes are wide-ranging and continuously evolving. VA 
refuses to sit idle, and is working across the Department and 
with our external partners to better detect and disrupt 
financial exploitation.
    In fiscal year 2022, the Veterans Benefits Administration 
developed and executed five public awareness campaigns on fraud 
prevention, reaching over 8.5 million veterans and dependents 
with information on identifying and avoiding fraud.
    One prevalent predatory scheme targeting veterans is the 
redirection of a veteran's monthly benefits through identity 
theft. The Veterans Benefits Administration monitors and 
confirms all direct deposit changes, provides support when 
benefit payments are stolen, and reports suspected fraud to the 
Office of Inspector General.
    Another scheme is pension poaching, which includes a 
variety of financial scams that target veterans and their 
families. The Veterans Benefits Administration has fraud 
coordinators at each of its Pension Management Centers to 
assist in identifying potential fraud, and VA has added 
clarifying language on application forms regarding the 
limitations on charging fees.
    The Office of General Counsel's Accreditation, Discipline, 
and Fees Program, or ADF Program, plays a vital role in 
combatting predatory practices, particularly those executed 
through offers of claims assistance. Under current law, no one 
may lawfully assist claimants in the preparation, presentation, 
and prosecution of claims for a fee before VA without being 
recognized by VA to do so.
    OGC's ADF program accredits and oversees representatives of 
veteran service organizations, or VSOs, as well as attorneys 
and claims agents for this purpose. There are currently 91 
recognized VSOs, approximately 8,000 accredited VSO 
representatives, 5,500 attorneys, and 500 claims agents.
    The functions of the ADF program include evaluating 
accreditation applications, monitoring conduct of VA-accredited 
individuals, investigating complaints, deciding fee disputes, 
and removing accreditation. OGC has established a disciplinary 
process to address complaints about VA-accredited individuals 
whereby VA may suspend or cancel accreditation for incompetence 
or misconduct.
    Another accreditation safeguard is that claimants may 
request, or OGC may initiate, review of the reasonableness of a 
fee. VA is authorized by statute to reduce an unreasonable fee 
charged by an accredited individual, and in fiscal year 2022, 
OGC directed the return of nearly $2.5 million in benefit 
payments that were initially withheld for the payment of fees.
    In the case of non-accredited individuals or organizations 
that may be charging improper fees for claims assistance, OGC 
notifies them to cease their unlawful practices. Sometimes they 
comply, but most often they do not. Because there are no 
criminal penalties under Federal law specific to this practice, 
VA's recourse is to report the matter to Federal, state, or 
local agencies for consideration under their rules or laws.
    VA has consistently proposed legislation that would 
reinstate the penalties for charging or receiving any fee or 
compensation with respect to the preparation, presentation, or 
prosecution of claims for VA benefits, except as provided by 
law. Over 40 percent of the complaints received by the ADF 
program are against unaccredited individuals and organizations. 
VA's proposal is largely reflected in the proposed bill S. 740, 
The GUARD Act.
    The Veterans Experience Office led VA in establishing 
VSAFE, which is a Department-wide team developing long-term 
solutions to combat potential fraud through knowledge sharing 
and the implementation of best practices. VSAFE utilizes 
insights across the VA so that the Department speaks with one 
voice regarding fraud prevention and cultivates ongoing 
partnerships with Federal enforcement agencies.
    Currently VSAFE is designing targeted communications to 
educate and warn the veteran community about fraud schemes and 
unsavory predatory practices that affect veterans' daily lives. 
These include a one-page infographic that can easily be shared, 
a more robust booklet on how to identify and report potentially 
fraudulent schemes, and a centralized webpage that will make it 
easier for veterans to connect electronically with VA on this 
important issue.
    This concludes VA's statement. We will be happy to answer 
any questions you may have.

    [The prepared statement of Mr. Barrans appears on page 31 
of the Appendix.]

    Chairman Tester. Thank you, Mr. Barrans.
    Next up is Mr. Rice from the CFPB. You have the floor.

                    STATEMENT OF JAMES RICE

    Mr. Rice. Chairman Tester, Ranking Member Moran, and 
distinguished members of the Committee, it is my pleasure to be 
with you here today to discuss the Consumer Financial 
Protection Bureau's ongoing work to protect servicemembers, 
veterans, and military families from scams, fraud, and harmful 
practices as they navigate the financial marketplace.
    I proudly served in the U.S. Army, first on active duty as 
an enlisted medic, then for over 30 years as an officer in the 
Army Medical Service Corps. I served as the Director of the 
Army Wounded Warrior Program, and finally as the Chief of the 
Health Services Division on the Joint Staff. I know firsthand 
how financial problems can harm servicemembers during active 
duty and veterans later in life.
    I am proud to lead the Office of Servicemember Affairs at 
the Consumer Financial Protection Bureau, as we work to educate 
and empower servicemembers, veterans, and military families, 
monitor the market, and coordinate efforts across the 
government to protect military consumers in the financial 
marketplace.
    Veterans' financial concerns, in many regards, reflect the 
concerns of non-veterans, and veterans directly benefit from 
the CFPB's actions to address broad market problems. Over half 
of all complaints that we receive from veterans, military 
retirees, and their families, reference problems with credit 
reporting, the number one area of concern for non-veterans. 
This is followed by debt collection and mortgage issues, also 
top concerns for non-veterans.
    The CFPB is acutely aware that understanding the veteran 
experience, disaggregated from active-duty servicemembers and 
the civilian population, must be part of our work to engage 
consumer populations and monitor markets.
    Let me provide some examples. You have heard from my 
colleagues at the VA about ongoing concerns with unaccredited 
coaches or consultants charging thousands in fees and even 
sending bills to debt collectors. This is an area we are 
watching closely, particularly for any violations of the Fair 
Debt Collection Practices Act and other Federal consumer 
financial laws.
    We have also initiated market monitoring efforts that will 
provide an unprecedented view into how the financial markets 
serve military consumers. Earlier this year, we issued a 
request for information on data broker practices that may be 
putting military consumers' privacy at risk.
    We have also undertaken a similar effort for credit cards 
and auto loans. We use information from these efforts and other 
sources to develop insights into the servicemember and veteran 
financial experience. For example, our research recently found 
that only a small fraction of activated National Guard and 
Reserves used the Servicemembers Civil Relief Act interest rate 
reduction benefit on auto and personal loans.
    Next, I would like to discuss what happens when we take 
action against entities that violate the laws we enforce. In 
many cases, we will partner with other Federal regulators or 
state agencies to investigate and coordinate a response.
    Since opening our doors, the CFPB has secured $175 million 
in monetary relief resulting from 39 public enforcement actions 
that involved harm to servicemembers and veterans. These 
included six public enforcement actions for violations of the 
Military Lending Act. In some cases, the companies in question 
were repeat offenders. In 2020, we also concluded a sweep of 
investigations of multiple mortgage companies that used 
deceptive mailers to advertise VA-guaranteed mortgages. The 
CFPB halted these harmful practices and obtained more than $4.4 
million in civil money penalties as a result of this sweep.
    I would like to close by discussing how we work across 
government and with military stakeholders to carry out our 
work. We are working with the VSAFE interagency working group 
to create a one-stop comprehensive fraud prevention guide for 
veterans and those that support them.
    The CFPB's Offices of Servicemember Affairs and Enforcement 
convene a quarterly working group that includes the Department 
of Justice, the Service Legal Assistance chiefs, legal 
assistance staff of various military installations, and Service 
JAG School representatives. Our purpose is to share information 
and develop coordinated responses to unlawful conduct targeted 
at military consumers.
    And we work with other agencies and branches of government 
to address complaints from military consumers that are referred 
to us. Likewise, when we receive a complaint about an issue 
that falls under the jurisdiction of another agency, we make 
that referral so that that military consumers can get the help 
that they need.
    I want to thank the Chairman, Ranking Member, and other 
members of the Committee for holding this important hearing and 
for the opportunity to appear before you on behalf of the 
Consumer Financial Protection Bureau. I look forward to 
answering your questions.

    [The prepared statement of Mr. Rice appears on page 39 of 
the Appendix.]

    Chairman Tester. Thank you, Mr. Rice.
    Next up we have Ms. Vaca from the FTC.

                    STATEMENT OF MONICA VACA

    Ms. Vaca. Chairman Tester, Ranking Member Moran, and 
distinguished members of the Committee, thank you for the 
chance to talk about the FTC's work on the critical issue of 
fraud and other unlawful schemes that affect veterans. I am 
Monica Vaca, Deputy Director of the FTC's Bureau of Consumer 
Protection. As you know, my remarks are my own and do not 
reflect the views of the Commission or any individual 
commissioner.
    Through our Consumer Sentinel Network, the FTC collects 
reports from people, including veterans and servicemembers, 
about frauds and other illegal practices that they encounter. 
Last year we received more than 190,000 reports from the 
military community, reporting fraud losses of more than $414 
million.
    To address these problems we use a multifaceted approach 
that includes aggressive law enforcement, industry-wide rules, 
and complementary policy, education, and outreach efforts. We 
also leverage our relationships with our Federal and state 
partners to have the broadest possible impact.
    In 2022, the top fraud reported to the FTC from military 
consumers was impersonation fraud. This includes callers 
claiming to be a government agency, like the IRS, or a bank, or 
a credit union. We have addressed imposters like these in a 
number of ways. For example, the FTC sued a business that 
allegedly posed as official military recruiters using websites 
like Army.com to attract potential recruits, and getting them 
to share contact information, which the company then sold to 
for-profit schools.
    More broadly, the Commission has started a proposed 
rulemaking that could give our agency additional tools to 
address government and business impersonation schemes. And we 
have engaged in numerous outreach and educational efforts to 
alert military consumers about these scams.
    The FTC has also brought actions against companies in a 
variety of industries that use illegal sales tactics to target 
veterans and servicemembers. For example, the FTC and a group 
of 18 states sued a national jewelry chain, alleging that it 
used illegal financing and sales practices to cheat military 
families, specifically by making deceptive claims that 
financing purchases through the company would raise 
servicemembers' credit scores and adding expensive protection 
plans onto purchases without consent.
    We also have a long history of challenging deception in 
marketing big-ticket items. For example, we have brought 
actions alleging that a major lender marketed false mortgage 
rates to servicemembers, that a large for-profit school touted 
false job opportunities to veterans, and that a fast-food 
franchiser used bonus promises to target veterans. The FTC is 
currently engaged in a proposed rulemaking that would prohibit 
certain unfair and deceptive practices in motor vehicle sales, 
one of the biggest purchases people ever make.
    Protecting consumers and ensuring the vigorous enforcement 
of the law is a group effort, and collaboration has long been a 
cornerstone of the FTC's agenda. We have regularly worked with 
trusted community partners, for example, Pine Tree Legal 
Services in Maine, which worked with us to create a video 
featuring one of their clients, a veteran who warned others 
about the debt-related scams he had faced. And since 2013, when 
the FTC launched MilitaryConsumer.gov, we have worked closely 
with my colleagues at the VA, the CFPB, the Department of 
Defense, and so many others to raise awareness of scams 
targeting the military community.
    But there is still more to do. A critical part of the FTC's 
enforcement work has been clawing back money from scammers and 
returning it to consumers. As detailed in the written 
testimony, the Supreme Court's AMG decision dealt a massive 
blow to the FTC's ability to obtain that kind of relief. At a 
time when we are seeing veterans report more than a 50 percent 
increase in financial losses in 2022, the AMG ruling has 
hobbled our ability to fight fraud and get lost dollars back to 
military consumers.
    We urge Congress to pass legislation restoring the FTC's 
ability to seek monetary relief for the good of all consumers.
    Thank you for the opportunity to discuss the FTC's work. I 
would be happy to answer your questions.

    [The prepared statement of Ms. Vaca appears on page 54 of 
the Appendix.]

    Chairman Tester. I thank all three of you for your 
testimony. As long as you brought it up, Monica, tell me what 
the AMG ruling did.
    Ms. Vaca. Absolutely. In 2021, the Supreme Court held that 
the FTC could no longer get monetary relief under the FTC Act 
for unfair or deceptive acts or practices. So what that means 
is that we are hobbled. We do have some tools left. They are 
more narrow.
    Chairman Tester. And what was their reasoning for that? Did 
they give you a reason?
    Ms. Vaca. They absolutely did. So the Supreme Court 
reasoned that Section 13(b) of the FTC Act, which provides for 
injunctive relief, did not include monetary equitable remedies.
    Chairman Tester. Okay. So it had to do with the law. And 
if--and I am not saying we are going to do this--but if we did 
decide to put forth a bill to deal with this issue then you 
could get monetary restitution back from the companies that are 
doing everybody harm, including our veterans.
    Ms. Vaca. We certainly could. In the five years before that 
ruling, we got $10 billion back for consumers.
    Chairman Tester. Okay. I am just going to keep going and go 
basically off your testimony. What does a veteran do with a 
plan that they got without their consent? Do they have the 
rights just to tell them to take a hike, or what are the legal 
ramifications of that?
    Ms. Vaca. I think you are referring to the Harris Jewelry 
case.
    Chairman Tester. Yes.
    Ms. Vaca. Yes, if they have a so-called protection plan 
that they did not consent to, they might not even know that it 
exists. They might not even know how to exercise their rights.
    Chairman Tester. Yes. But they have the rights to say, 
``Forget it. We are not paying for it.'' Correct?
    Ms. Vaca. Well, they could face repercussions from the 
company, and that is why we brought the case against Harris 
Jewelry.
    Chairman Tester. Okay. And from an education standpoint, 
what is the FTC doing to help educate the services that you 
offer?
    Ms. Vaca. So we launched MilitaryConsumer.gov, which has a 
host of information, including about frauds and scams. We do 
consumer alerts for all kinds of----
    Chairman Tester. Are those also done on the internet.
    Ms. Vaca. Absolutely. They are.
    Chairman Tester. Okay. I mean, are they done anywhere else 
but the internet?
    Ms. Vaca. Well, MilitaryConsumer.gov is online.
    Chairman Tester. Right. But the statements that are sent 
out are on the internet, is what I am saying.
    Ms. Vaca. Correct.
    Chairman Tester. Okay. Anything else you are doing?
    Ms. Vaca. We do webinars. We do outreach events.
    Chairman Tester. Are you doing outreach to VSOs?
    Ms. Vaca. We are doing outreach to the military community 
to tell them about VSOs, to tell them how to access those 
services.
    Chairman Tester. There are--and I am not telling you what 
to do. You guys are going to do what you want to do, but I do 
believe you have the right thing in mind. But there are a bunch 
of VSOs out there that do a great job reaching out to their 
members. And if you able to educate them, they can do a lot of 
the footwork for you.
    Mr. Rice, how many people are in your department at the 
CFPB, that deal strictly with veterans?
    Mr. Rice. The Office of Servicemember Affairs currently 
consists of nine people.
    Chairman Tester. Nine people. And how much money have you 
recovered?
    Mr. Rice. The figure that I used was, since we opened our 
doors, $175 million.
    Chairman Tester. And this is just veteran centric.
    Mr. Rice. That is just the veterans, sir.
    Chairman Tester. $175 million that you have recovered that 
have been chiseled out of veterans.
    Mr. Rice. That is right, Senator.
    Chairman Tester. How long have you been in business?
    Mr. Rice. The Bureau----
    Chairman Tester. I know how long the Bureau has been in 
business. Were you there from its inception?
    Mr. Rice. I was not. I have been on board for----
    Chairman Tester. No, but has this department been there 
from their inception?
    Mr. Rice. Yes. In the Consumer Financial Protection Act, it 
specifies that there must be an Office of Servicemember 
Affairs, and Holly Petraeus was the original----
    Chairman Tester. Yes, yes, yes, who did a marvelous job 
too. So thank you.
    Mr. Barrans, you talked about determined reasonableness of 
fees between accredited and non-accredited. Do you ever find 
that the fee is not reasonable with an accredited agency, which 
the VA accredits?
    Mr. Barrans. Yes. The reviews we conduct are with respect 
to accredited individuals. We do not generally have visibility 
over what non-accredited individuals are doing because they are 
not----
    Chairman Tester. So the reasonableness of fees applies to 
the accredited part of the folks who are out there doing 
business.
    Mr. Barrans. That is correct.
    Chairman Tester. The non-accredited folks are free, just 
doing whatever the heck they want.
    Mr. Barrans. They are operating without accountability, 
yes.
    Chairman Tester. And you take this information, you get it, 
and you pass it on to state and local law enforcement. Is that 
what I heard you say?
    Mr. Barrans. Generally, yes, we make referrals to state and 
local law enforcement.
    Chairman Tester. Do you have any idea on how often these 
referrals are taken up, or if they are declined?
    Mr. Barrans. I do not have statistics on how often. We have 
worked with different state attorneys general on a number of 
cases, but there have not been a large number of cases.
    Chairman Tester. Do you know what the reason for that is? 
Is that a lack of manpower between the state and local 
officials, or is it just that the case is not that strong?
    Mr. Barrans. I do not know if there is a reason, or that 
there is a single reason. These tend to be small-dollar cases, 
so if that is a factor in prosecutorial decisions that may be a 
factor.
    Chairman Tester. I have got you. CFPB just said they got 
$175 million. That is not small dollars.
    Mr. Barrans. Right.
    Chairman Tester. And that is kind of the same stuff you are 
dealing with?
    Mr. Barrans. Well, we certainly have seen some larger 
organizations who are operating on a large scale, and those are 
the cases generally where we have seen interest from states or 
from other entities.
    Chairman Tester. Senator Moran.
    Senator Moran. Chairman, thank you. Just a couple of 
questions designed to get me better educated. So how does a 
veteran or servicemember know whether they should contact the 
Consumer Financial Protection Bureau or the FTC? Do you have 
overlapping jurisdiction? And what precipitates someone filing 
a complaint with either one of you? How do they know how to do 
that, or that they should do that?
    Mr. Rice. Senator, it is a great question. You know, how 
should they know?
    Senator Moran. I did not know whether your pause was like, 
it was a----
    Mr. Rice. If the question is how should they know, our goal 
is to ensure that they do know that there is a process.
    Senator Moran. So is the Consumer Financial Protection 
Bureau, are you the one who is advertising, making known? It is 
your responsibility to get word to veterans?
    Mr. Rice. I would say that we do not have a government-wide 
responsibility to do that. But within the Federal Consumer 
Protection Act we do have that responsibility for the areas 
that we are responsible for.
    Senator Moran. Monica, would you like to respond on the 
Federal Trade Commission and then I will follow up.
    Ms. Vaca. I will just note that we do encourage people to 
report to our site at ReportFraud.ftc.gov. And going to that 
site helps people know what to do next, and it specifically 
will refer people to the CFPB, so that they do not have to 
figure it out themselves.
    Senator Moran. So how to veterans know to go to that site?
    Ms. Vaca. We do have outreach on MilitaryConsumer.gov, for 
instance. All of our outreach tells people how they can report 
their experiences to us.
    Senator Moran. Does the VA refer veterans or cases to 
either one of your agencies?
    Ms. Vaca. The VA certainly has reports that they provide 
into Consumer Sentinel Network, which is a large online 
database that collects reports from a number of Federal and 
state law enforcement agencies.
    Senator Moran. Well, you know, it has disappointed me, 
surprised me the number of times in which a veteran does not 
know what his or her resources are, even at the Department of 
Veterans Affairs, and I just am trying to figure out if that is 
true, how do they know there is somebody else out there who 
might be helpful to their cause. It sounds like people have 
found you. You have cases, you have filed cases, and you have 
indicated you have recovered--I mean, it is a significant 
number of dollars. I do not know how significant it is compared 
to all the fraud that is out there. But somebody is figuring 
out that you exist and might be of benefit to them, and I will 
explore that further as I figure out what the next step is to 
make sure that veterans in Kansas and across the country know 
there is an advocate for them.
    Mr. Rice. Sir, if I may, before we leave the topic of who 
should report where. A great resource is at USA.gov. On their 
landing page there is a position for complaints. So with two 
clicks an individual will be taken to a screen that says, 
``What is it that you want to complain about? Do you want to 
complain about the government? Do you want to complain about a 
financial issue?'' And it is a logical tree that takes someone 
who has an issue, it takes them to what we think is the right 
place, whether that is the CFPB, if it is within the parameters 
of our responsibility, or whether it is an FTC or VA or some 
other government agency requirement. It is a great place.
    Senator Moran. Thank you. There are veterans' 
representatives in the audience and I will explore with them 
what role the VSOs play in directing veterans to particular 
places for help.
    Mr. Barrans, how does a veteran know whether or not the 
person who is pitching them for providing a service or a 
benefit, how do they know whether that entity is accredited or 
not accredited?
    Mr. Barrans. Thank you, Senator. Our office, the ADF 
program, does provide fact sheets on the website which are 
linked from the main VA webpage to the Accredited Claims 
representation site of the VA page, which has a searchable 
database of accredited representatives. We also include fact 
sheets there on how to select a representative. And to the 
prior question, we also have fact sheets discussing how to file 
a complaint, to include filing complaints with VA, as well with 
the FTC Sentinel database.
    Senator Moran. And so the website would show who is 
accredited. It would not necessarily list, and you would not 
know, who is in the world doing things that is unaccredited. Is 
that right?
    Mr. Barrans. Correct, except that the database is 
searchable. So if you were approached by a representative, you 
could search for that representative.
    Senator Moran. You could see whether that entity that is 
calling on you, asking if they can be of help, is on your list.
    Mr. Barrans. Correct. Any individual can search that.
    Senator Moran. Okay. One of my concerns, and it may be my 
circumstance in life, at my age in life, it troubles me a bit 
that the solution of providing knowledge to people is through 
the internet. I do not know whether that is an effective tool 
for the vast majority of the veterans that I know, and veterans 
in Kansas. I am not sure that is the natural place that people 
would go. They would go to their Disabled American Veterans, to 
the VFW, to the American Legion, maybe. Maybe they would ask 
their cousin who has been through this as to what they should 
do and what do you know about this.
    But I do not know whether that is the effective way that--
again, I worry that we provide many services and benefits to 
veterans and so many of them still do not know, and that is 
dealing with the VA.
    Mr. Barrans. If I may, we recognize the challenge of 
ensuring we are reaching everyone. We have put information on 
some of our claims forms about fee restrictions. But part of 
the endeavor, particularly with the Veterans Experience Office 
and the VSAFE Initiative is to explore better ways to 
coordinate the messaging across the Department and reach 
veterans in the ways that will be most effective.
    Senator Moran. Thank you very much, all of you.
    Chairman Tester. Just to be clear, Senator Moran, we do not 
think you are really, really, really old.
    Senator Blackburn.

                    SENATOR MARSHA BLACKBURN

    Senator Blackburn. Thank you, Mr. Chairman, and thank you 
to each of you for being here.
    In Tennessee, we hear a lot from our veterans about 
concerns over fraudulent activity, and we have got great VSOs, 
and they try to keep people informed.
    Ms. Vaca, I do want to come to you. When you look at the 
AMG decision, and then I read your testimony. You had 200,000 
complaints from military consumers, and it was $400 million in 
damage. Now, that is double what it was the year prior. So if 
you are saying your hands are tied, which, in essence, is what 
I am hearing you say, then talk to me about a couple of things, 
the factors that account for the massive growth you have seen 
in claims that have been filed, but also what avenues are there 
for you to help veterans get the money back, and then what 
avenues are you going to be able to travel to work with others 
where you are not able to do that?
    So that is kind of three or four questions rolled in one. 
So let's talk about the effect of the AMG closing off your 
opportunities. Let's talk about what has caused the number of 
complaints to increase. Is it awareness? Is it that more people 
are preying on veterans? What do you see on that?
    Ms. Vaca. Absolutely. So as I mentioned, the effect of the 
AMG decision is really significant on our agency. We did, in 
the five years prior to that decision, get more than $10 
billion back to consumers. That has been largely compromised.
    With respect to your second question about the increase in 
the dollars lost, what we have seen over the last few years is 
a really big spike in online frauds, especially on social 
media, and we have also seen large dollar losses associated 
with people paying by cryptocurrency. Cryptocurrency is a huge 
red flag. If anybody asks or demands to be paid by 
cryptocurrency it is a scam, and we do need to get that message 
out, and we really are trying to get that message out. So that 
is a large part of what is driving the increase.
    And your last question was about what other avenues do we 
have to get the money back and how can we engage with the 
veteran community. We do still have some tools to get money 
back, and we are working those as much as we can, and we have 
an incredibly creative and dedicated staff that is doing that 
and continues to bring law enforcement cases. But as much as we 
love to bring law enforcement cases, we wish that people do not 
lose money in the first instance, and for that reason we are 
doing a lot of outreach and education, and we are not just 
doing our own education on MilitaryConsumer.gov, we are also 
partnering with the people who provide direct services to 
veterans. So we are providing trainings, for instance, to 
personal financial managers so that they can help direct the 
people that they serve daily.
    Senator Blackburn. Okay. And you all recently sent notices 
of penalty offenses to nearly 700 companies. This was an FTC 
action, and you did it for lack of ability to provide 
substantiation for what they were advertising. Some of these 
that were carrying out fraud against veterans, were they in 
those 700 companies? Was there any relationship between those 
two actions?
    Ms. Vaca. It is undoubtedly the case that many of those 
companies were reaching veterans and servicemembers with their 
false claims, and that is what we see. We bring large law 
enforcement actions because we do see that scammers and bad 
business practices affect the broad community, including 
servicemembers.
    Senator Blackburn. Okay. Mr. Rice, I want to come to you. 
Ms. Vaca quantified the increase that they have seen in 
complaints that have filed and the dollar value, the dollar 
loss from those complaints. With your department what are you 
seeing in the rate of increase of those complaints and then the 
growth in the dollar value on those complaints?
    Mr. Rice. At the CFPB, since inception and the regulation 
that established the Bureau, required us to have a complaint 
process in place. Earlier this year, we crossed the 5 million 
complaint threshold. The rate now is about 100,000 complaints a 
month that come into the Bureau, largely. Of that, between 5 
and 6 percent, historically, about 5.5 percent in the last year 
have been servicemember or veteran complaints.
    I will have to take back the second part of your question 
about a dollar value that is associated with that. I think that 
is going to be a little difficult to quantify, but I will 
certainly work with the folks back at the Bureau.
    Senator Blackburn. I think it would be helpful to see that 
because the goal should be to prevent these actions. But my 
time has expired so I will carry that conversation forward with 
you when you get the info back to us. Thank you.
    Chairman Tester. Senator Hassan.

                  SENATOR MARGARET WOOD HASSAN

    Senator Hassan. Thanks, Mr. Chair and Ranking Member Moran, 
and thanks to all of our witnesses for being here.
    Mr. Boerstler, I want to start with you because this is a 
question really about government benefits that veterans may get 
that do not actually qualify as veterans benefits specifically. 
In New Hampshire and across the country, our veterans are aging 
so they are becoming eligible for Social Security and Medicare 
benefits. So while VA is understandably focused on preventing 
fraud and abuse among its beneficiaries, bad actors also target 
other government benefits that veterans receive.
    So what is VA doing to coordinate with other agencies to 
collect data on all scams and financial crimes where veterans 
are victims?
    Mr. Boerstler. Thank you very much for the question, 
Senator. The VSAFE Initiative, the Veteran Scam and Fraud 
Evasion Task Force that we have put together, not only within 
VA to share information and communicate and coordinate more 
effectively across the administrations and staff offices but 
across the Federal landscape, to include our CFPB and FTC 
partners, as well as the Social Security Administration, the 
Department of Justice, the Department of Defense, Department of 
State, Department of Education. So numerous benefits, as you 
mentioned, we are working actively to share information and 
trends on how veterans are getting scammed and fraud attempts 
coordinated toward them, and then more importantly, how they 
can report these different incidences to the right Federal 
jurisdiction.
    So that is why we are wanting to consolidate a lot of this 
information. The Chairman and Ranking Member brought up this 
issue a minute ago. It is confusing for veterans to identify 
what type of fraud or scam is being targeted toward them, and 
more importantly, how to report that instance. We need to make 
it easier for them. So that is what we are designing with the 
VSAFE Initiative, and in the coming months we should have that 
reporting channel up and running.
    Senator Hassan. Okay. I will look forward to hearing more 
about that.
    And to Mr. Barrans, through emerging artificial 
intelligence tools such as ChatGPT, bad actors are increasingly 
able to rapidly produce realistic scam emails that can target 
VA beneficiaries, along with lots of other people, but we are 
focused on VA here. What is VA doing to prepare for AI-enabled 
scams, and can Congress be doing more to assist you?
    Mr. Barrans. Thank you for that question. So I am not aware 
of specific things, certainly within my office that are 
targeting that specifically, but we are working, as Mr. 
Boerstler mentioned, across the government with our partners. 
And within VA that includes VBA, it includes the Office of 
Inspector General, and it includes VEO, to identify and address 
emerging scams such as that.
    Senator Hassan. Well, one of the things we are seeing, for 
instance, is AI-enabled scams through the IRS, or pretending to 
be the IRS. So you might want to reach out to them as they are 
trying to develop their own tools for staying ahead of the 
technology.
    Thanks. That is all I had, Mr. Chair.
    Chairman Tester. Senator Boozman.

                      SENATOR JOHN BOOZMAN

    Senator Boozman. Thank you, Mr. Chairman, and again, thank 
you all for being here about this really important subject. 
With all that is online, and this and that, as you mentioned, 
there are solutions but there also are a lot of scams out 
there. And with the passage of the PACT Act there is lots of 
benefit action, this and that, that people are taking advantage 
of in a very unfair way.
    Currently there are no criminal penalties in place to 
prosecute individuals and organizations who charge improper 
fees for the preparation, presentation, or prosecution of VA 
benefits claims. Our legislation, the GUARD Act, which we 
introduced this year along with Senator Blumenthal would 
address this problem and reinstate the criminal penalties.
    Mr. Barrans, can you speak to the importance of having 
these penalties in place to ensure there is proper recourse for 
dealing with these individuals and organizations?
    Mr. Barrans. Yes. Thank you very much for that question. VA 
strongly supports the GUARD Act, and we have continued to push 
for this type of legislation over the years. It is critically 
important because we have seen a rise in individuals and 
organizations acting within this space to charge illegal fees, 
and they do it with somewhat seemingly assurance of impunity, 
meaning they recognize that VA's authority is somewhat limited 
in prosecuting them, that we need to coordinate through other 
Federal, state, and local entities, and that we are competing 
for prosecutorial and investigative time with a lot of other 
matters.
    We believe that certainly one of the potential barriers is 
that other Federal, state, or local entities will need to find 
a way to make these actions fit within their statutes and 
regulations, which is certainly possible, but the laws vary 
from state to state. It may not be a perfect fit. We think it 
would make it much easier if there was a single Federal 
standard specific to these actions that would make it easier 
for prosecutors to bring actions.
    Senator Boozman. Very good. Thank you. Mr. Barrans, 
according to the VA website it currently takes a year, on 
average, to process the claims packet. Additionally, according 
to the VA, there are 211,276 claims in the backlog waiting to 
receive a rating decision. Can you tell us why it takes a year 
to get that done, to approve a claim agent application, and 
again, what can we do as a Committee to help you speed the 
process up?
    Mr. Barrans. Yes, thank you. So the claims agent 
applications tend to be the most labor intensive of the three 
categories of representatives that we accredit, and that is 
actually by a few orders of magnitude. And that is because, of 
those three, we do not have an external body that serves to 
certify the character and fitness of the representatives. With 
attorneys we rely on state bars to perform that function. With 
VSO representatives we rely on VSOs to perform that function 
with their robust training and certification programs.
    Lacking any similar resource for claims agents, VA has to 
do the work of conducting background checks, conducting 
reference checks, and then conducting knowledge checks through 
the administration of a written exam. So that takes more time, 
obviously, and more effort.
    And we have seen a growth in the number of applications for 
claims agents. And apart from that, the Accreditation, 
Discipline, and Fees Office is a small office. We operate with 
four staff attorneys, between four and six paralegals, and one 
supervisory attorney. And we have a wide array of matters that 
we have to deal with, not just initial accreditations but 
oversight, complaints, fee decisions, and those sorts of 
things.
    Senator Boozman. Well, that's important and we do need to 
help. Maybe we can help think outside the box. There has got to 
be other entities that have the same problem, you know, 
certifying individuals, that have overcome it, so maybe we can 
help again in that regard, which really is key.
    In meetings surrounding this topic of unaccredited 
individuals and organizations I often hear that VSOs do not 
have the capacity to assist veterans in their claims, causing 
extended wait times to receive a decision. These unaccredited 
individuals and organizations state that they exist to fill 
this void created by a lack of VSO capacity.
    Mr. Barrans and Mr. Boerstler, in your opinion do you 
believe this statement is true that VSOs do not have the 
capacity to efficiently handle benefit claims?
    Mr. Barrans. Thank you, Senator. I cannot speak for our VSO 
partners, but in our experience with the VSOs, we have more 
than 8,000 VSO representatives currently accredited. We have 
seen the wonderful job that they do. We note that the system, 
the initial adjudication system, is designed to be weighted 
very heavily in favor of getting to yes on grants of benefits, 
so that even those claimants who do not have a representative, 
they succeed at a very high rate.
    But to the question of VSOs, we believe that they do a 
great job and we are not aware of indications that they are 
slowing down the process or failing to provide services in any 
respect.
    I do not know if Mr. Boerstler has anything to add to that.
    Mr. Boerstler. I would just love to add, Senator, that you 
probably have heard that the Veterans Benefits Administration 
is processing claims at record rates at this current time, 
which is incredible, and that is a testament to our partnership 
and the training that we provide our veteran service 
organization partners and the attorneys and the claims agent. 
Obviously, in terms of reporting different scams and frauds, we 
want to make it as easy as possible and know that they can call 
the Office of Inspector General or the National Contact Center 
for the Veterans Benefits Administration.
    Senator Boozman. Thank you all very much. We appreciate 
you.
    Chairman Tester. Senator Blumenthal, it is good to have you 
here. Before we get to your questions I want to say that we all 
watched as UConn marched through March Madness and trashed 
everybody within the field and won the national championship. 
All I have got to say is that must have been one hell of a 
parade.
    Senator Blumenthal. It was a great parade and I hope I do 
not have to relive it.
    [Laughter.]

                   SENATOR RICHARD BLUMENTHAL

    Senator Blumenthal. Life is a parade. Stuff happens. Glad 
to be with you, and I appreciate your support, Mr. Chairman and 
Ranking Member, and thank you so much for having this hearing. 
This is of such immense importance.
    I want to thank the Chairman for joining Senator Boozman 
and I in the GUARD VA Benefits Act, which would restore the 
criminal penalties for unaccredited actors charging veterans 
fees for their claims, for other kinds of preparation and 
managing of the issues that they may present to the VA. I think 
it is vital that we have this leverage and tool so that we can 
effectively prosecute people who exploit our veterans.
    But I do think that there are already measures that can be 
taken, and Ms. Vaca, I think you would agree with what Mr. 
Barrans just said, that state and local authorities and the 
FTC, under the present consumer protection statute, deceptive 
and misleading practices can be pursued, albeit mostly civilly 
but sometimes criminally. And what I would suggest is that we 
need a full court press among all of the agencies with consumer 
protection jurisdiction, to make sure we use existing statutes 
to protect veterans against the burgeoning threat to their 
rights and their pocketbooks from these kinds of bad actors. 
Would you agree?
    Ms. Vaca. Thank you, Senator. Yes, I would agree.
    Senator Blumenthal. And, you know, what I have found in 
consumer protection work that I did as state attorney general, 
that what is really vital is for the victims to come forward. 
You cannot make cases out of thin air. You need witnesses. You 
need documents. You need cases. And let us be very blunt. 
Sometimes victims feel embarrassed, ashamed that they have not 
been smarter. ``Too good to be true,'' you know, if it looks 
too good to be true, it probably is. A lot of folks are simply 
reluctant to come forward.
    So what I would like to know from the VA is, what are you 
doing to encourage our veterans to come forward, even if it is 
just confidentially? You need to have hotlines. You need to 
have ways for them to communicate in ways that they may feel 
secure and comfortable. Mr. Barrans, I am sorry.
    Mr. Barrans. Thank you, Senator. I would like to turn it 
over to Mr. Boerstler to address that from the VEO perspective.
    Mr. Boerstler. And thank you, Senator. As I mentioned a 
second ago, the VSAFE Initiative, the Veteran Scam and Fraud 
Evasion Task Force, that is not just within VA but encompassing 
the entire Federal landscape and our partners here on the panel 
today, has really done a great job at bringing a lot of that 
information together and not only identifying the types of scam 
and fraud that are coming toward veterans but how to report 
them across the different jurisdictions and making it much 
simpler for our customers to understand, and to really amplify 
and elevate a lot of the great work that is already being done.
    But once again, our kind of our mission here is to inform, 
so create one-pagers that are educating them about things they 
should do or should not do. We want to educate them more 
thoroughly by providing a joint fraud prevention booklet that 
encompasses all the different fraud----
    Senator Blumenthal. Let me just interrupt----
    Mr. Boerstler. Yes, sir.
    Senator Blumenthal [continuing]. Because my time is 
limited, and I apologize. A one-pager, a booklet, great. But 
how many veterans are you really going to reach with a booklet 
and a one-pager? I mean, you live in the real world, just like 
I do, and veterans do not necessarily pick up booklets and one-
pagers. May I suggest that the same kind of mass communication 
that is right now being used by the lawyers seeking clients as 
a result of the Lejeune protections that we passed, that kind 
of massive outreach, should be the way to warn veterans about 
these kinds of scams and frauds and con artists, and you ought 
to run the alert up the flagpole.
    Mr. Boerstler. I totally agree, Senator, and I think radio, 
especially for rural veterans and their families, is a great 
way to reach, as well as our veteran service organizations, 
state Departments of Veterans Affairs, county Veteran Services 
officers, and your offices within each of your states, I mean, 
are great force multipliers. We all have different channels and 
we need to exercise every single one.
    Senator Blumenthal. My time has expired. I thank you for 
your work on this. I look forward to working with you, and 
again, I want to thank the Chairman for his having this 
hearing, and I yield to Senator Hirono.

                    SENATOR MAZIE K. HIRONO

    Senator Hirono [presiding]. Thank you very much.
    We know that there are certain groups of people in our 
communities that are targeted for scammers and for all kinds of 
bad acts, including identity theft, et cetera. Seniors are 
among that kind of group too, and we know that veterans are. So 
we often talk in this Committee about the need for better 
collaboration between DoD and VA when it comes to improving the 
well-being of veterans in the long term. And to what degree are 
efforts coordinated to ensure veterans have been made 
consistently aware? They cannot just be told once, ``Well, you 
could be a target,'' but I think consistent messaging of their 
status as targets for predatory schemes throughout their 
service and after separation.
    So hear from the VA, Mr. Barrans?
    Mr. Barrans. Yes. Thank you, Senator, for that question. We 
do value the collaboration with DoD, and I know that VA has 
been working in a very focused way, particularly over the last 
several years, to ensure communications throughout the 
lifecycle of every veteran. The Solid Start Initiative, which 
makes contact with veterans in the first year after their 
separation at three different touch points, is a great start, 
and that has been to serve as a check-in and information on 
benefits, and certainly that is an opportunity for us to bring 
in more information with respect to scams and fraud.
    But I will turn to my colleague in case he has additional 
insights.
    Mr. Boerstler. Well, in fact, to Mr. Barrans' point, 
Senator, I was in a Transition Assistance Program class last 
week, in Dayton, Ohio, at Wright-Patterson Air Force Base, and 
there is new fraud and scam evasion techniques and tactics that 
is trained in the VA one-day course, as well as the Defense 
Department does a tremendous job at educating its active-duty 
servicemembers. So we are working jointly across that life 
journey, as he mentioned, to educate them.
    Senator Hirono. Can you give me an example of how a veteran 
would evade a scam artist?
    Mr. Boerstler. Absolutely. We really encourage them to 
first identify and then report. And to Senator Blumenthal's 
comments about taking the shame out of it and making it much 
easier, so reporting to the Office of Inspector General or to 
the National Contact Center, the Veterans Benefits 
Administration line, or our Federal partners, and making sure 
that they are reporting that instance immediately.
    Senator Hirono. Well, it is one thing to report, but it is 
another for them to be able to shut it down on their own. So is 
there some concrete way that they know that somebody is trying 
to get their financial information or something so that they 
can just shut it down? That, to me, is a really important 
aspect of how to prevent things, because these scam artists, 
they will set up shop someplace else the minute you report it.
    So give me an example of what you say--any of you can tell 
me--what is a veteran to do if somebody calls them up, or what 
are some major ways that they are accessed? Is it through 
social media? Through the phone? How?
    Mr. Boerstler. Yes, and thank you, Senator, and before I 
defer to my colleagues, you know, in particular, in the 
identity theft portion that you mentioned, that is happening 
much more in the cyber and information technology space. We 
will send an alert to the veteran if somebody is trying to 
access their account, and make sure that it is them. And we are 
seeing more and more of that awareness and trying to educate 
them so that they are hardened against that type of scam.
    And I will defer to my colleagues. I am sure they have much 
more to add.
    Senator Hirono. Anybody else?
    Ms. Vaca. So one thing we tell not just veterans and 
servicemembers but the general public is, you know, sometimes 
you do get those weird, scary calls or text messages or emails 
that sound like you are in trouble. Right?
    Senator Hirono. Yes.
    Ms. Vaca. It sounds like maybe your financial account has 
been compromised, the IRS is after you, something like that, 
and those are a little bit frightening for people, and so 
people tend to act quickly. What we tell people is, pause. Slow 
down a little bit. Talk to somebody else. Just the act of 
saying it out loud helps you recognize the red flags.
    What are those red flags? Red flags are things like 
somebody is asking you for payment with a gift card. Somebody 
is asking you for payment via cryptocurrency, via money 
transfer. Those are all red flags that sometimes just saying it 
out loud helps you avoid it. Once you have avoided it, we ask 
that people please report it to the FTC at ReportFraud.ftc.gov.
    Senator Hirono. So once it is reported, though, is there 
any kind of prosecution that happens through the reporting?
    Ms. Vaca. Yes. So what happens when the reports happen is 
they go into our database, the Consumer Sentinel Network 
database, which has reports not just that the FTC collects but 
that the VA collects, that the CFPB collects, that a lot of our 
law enforcement partners collect, and others, you know, the 
Better Business Bureaus. It all goes into one database, that 
3,000 law enforcement users across the country can access to 
find those targets and to find those witnesses.
    So the importance of filing that report is really critical 
to the ability of all of these users to be able to assemble law 
enforcement cases.
    Senator Hirono. So let me be clear then. How successful are 
you at enabling the veterans to prevent themselves from being 
scammed in the first place? How successful are you at doing 
that, would you say?
    Ms. Vaca. So that is a hard question to answer because we 
do not have survey data about that, but I think that with 
outreach and with education we have a good chance. You know, 
again, it is a difficult thing to measure.
    Senator Hirono. Well, I also know that--excuse me.
    [Pause.]
    Senator Hirono. I can keep talking. We know that seniors 
are also targeted for all kinds of scams, and I remember 
talking with my mother. People in Hawaii are very polite. They 
are nice. And so when somebody calls you just do not slam the 
phone down on them. I used to say to my mom, ``When somebody 
calls you and you do not know that person, hang up the phone,'' 
but she would say, ``But I can't just do that.'' I said, 
``Well, just say, 'no, thank you' and then hang up the phone.''
    I am just looking for ways where the servicemembers do not 
become the kind of targets that makes them just so vulnerable 
to being scammed. So do you go through role-playing kinds of 
examples where they can just shut it down? Because, to me, 
prevention is the key.
    Mr. Boerstler. Senator, and that is one of the outcomes of 
the VSAFE work that we are putting together, one centralized 
hub where it cannot only help veterans and families identify 
the different types of fraud or scams that they may be 
experiencing but also which agency or agencies to report that, 
that has jurisdiction over that.
    Senator Hirono. If there are certain things, certain kinds 
of information that we, particularly as members of this 
Committee, because we are very committed to helping our 
veterans, if there is certain kinds of information that we 
should make available to our veteran population, and there are 
many of them in Hawaii, as you can imagine, I would really 
appreciate it, so I can be part of the messaging and the 
information that you are imparting to our veterans.
    Senator King?
    Senator King. I am going to pass for a few moments.
    Senator Hirono. Okay. I will let you gather your thoughts. 
Okay. I need to gather my thoughts too.
    Okay. I think you may have touched on this, to scare them, 
Ms.--is it Vaca? So a common practice among scammers and 
predatory creditors is to threaten to contact chain of command 
if a servicemember does not comply with their demand. So this 
is something that veterans are very familiar with, chain of 
command, not so much civilians. That is not a particularly 
useful threat for civilians, but for veterans, yes.
    So worries about superiors learning of financial issues 
create or perpetuate a stigma around reaching out for help in 
these situations, something that could easily continue to 
impact these servicemembers as they become veterans.
    What has been done to reduce the stigma around asking for 
help when it comes to dealing with predatory companies and 
scams, and how can we better normalize using the tools 
available for veterans in these situations?
    I will ask the whole panel. Who wants to respond.
    Ms. Vaca. I will just begin by saying that we brought law 
enforcement cases against collectors who have done that, who do 
just that. They threaten the servicemember, to tell them that 
they are going to report them to their commanding officer.
    Senator Hirono. Yes.
    Ms. Vaca. So we have brought those types of cases. And I 
think that a big piece of this is making it clear that this is 
happening, that this is normal, so that people know about it.
    So we publicize our cases as a way of educating consumers 
that this is happening. We also publicize, and to your earlier 
question about what your office can do to sort of alert people 
about scams, we publish our data. We publish what it is that 
servicemembers tell us are the top scams that they have 
encountered. And sometimes just knowing that this is a scam 
that primarily targets the military community helps people 
know, oh, this is something I should be on the lookout for.
    Senator Hirono. So the FTC has actually brought cases, have 
prosecuted some of these scammers?
    Ms. Vaca. Yes. We have brought a number of cases. We do not 
have criminal law enforcement authority----
    Senator Hirono. Yes, and I was going to say, what happens? 
Do they get fined, and if so, what level of fines are you able 
to impose on these people?
    Ms. Vaca. So thank you. Ideally what we are looking for is 
money back for the people who have been harmed, and an 
injunction to stop the illegal practices.
    Senator Hirono. Do you forward these kinds of claims to the 
Justice Department for criminal prosecution or to the state 
where these crimes occurred?
    Ms. Vaca. We do have----
    Senator Hirono. I will call it crimes.
    Ms. Vaca. Yes. We do have a criminal liaison unit so that 
we can appropriately refer matters where we have seen criminal 
conduct, yes.
    Senator Hirono. I think there needs to be criminal 
prosecution of these. Probably they just keep doing it because 
a fine, I do not think, is enough deterrence.
    Senator King.

                   SENATOR ANGUS S. KING, JR.

    Senator King. Mr. Barrans, I have a simple question. Do you 
believe the GUARD VA Act is an important tool? Do you support 
the bill or do you have suggestions as to how we might improve 
it? I am sorry I was late. We had a briefing on the leak 
situation.
    Mr. Barrans. Right. Yes. But why I do appreciate your 
question, VA strongly supports the GUARD Act. It aligns with 
proposals we have made for several years, partly because we 
have seen somewhat of a proliferation of actors who are 
flouting the law by charging fees illegally for assistance on 
initial claims. VA has very limited authority to hold 
unaccredited individuals accountable, and we believe that the 
GUARD Act would be a significant tool as a deterrent and as a 
tool for DOJ and other law enforcement agencies.
    Senator King. Should not everyone that is working on these 
kinds of issues with veterans be accredited?
    Mr. Barrans. Yes, yes, absolutely. Accreditation serves to 
protect veterans, both by ensuring that any representative who 
is helping them possesses the character and the skills, and 
also by ensuring that those individuals are accountable in case 
something goes wrong or they do anything incorrect.
    And accreditation, or something similar, is just the 
standard practice and best practice throughout the legal 
profession across our country. If you want to practice law in 
any state you need to be accredited by the bar before many, if 
not most, courts and administrative bodies. You need to be 
admitted.
    Senator King. Well, if you have suggestions about the GUARD 
Act as we are moving it through the process I hope you will 
share them, technical suggestions or proposed changes. And it 
seems to me that we are never going to get to the bottom of 
this problem without some serious penalties. There should be 
criminal penalties, in my view, for knowingly trying to take 
advantage of veterans, committing fraud against the VA or the 
veterans. Do you concur?
    Mr. Barrans. Yes, absolutely.
    Senator King. Because otherwise if there is no serious 
penalty then it's the cost of doing business. Fines are not 
necessarily going to do it.
    Mr. Barrans. Yes, and we understand that some of the 
organizations that are doing this are making quite a bit of 
money doing it, so there needs to be a significant deterrent 
and criminal penalties.
    Senator King. Any others want to chime in on this issue?
    Mr. Rice. I would just say we are happy to work on the 
technical aspects of the legislation and provide any feedback 
that the Bureau can.
    Senator King. Thank you. Thank you all very much. Thank you 
for being here.
    Senator Hirono. Senator Sullivan.

                      SENATOR DAN SULLIVAN

    Senator Sullivan. Thank you. Well, I am going to talk about 
the issue I have been talking about for quite some time, and 
you want to talk about a scam that is going on right now, it is 
in the Camp Lejeune bill that we passed with the PACT Act. 
Unfortunately, some of my Democratic colleagues will not help 
me on it, because the trial lawyers love the current situation. 
I really hope you guys can help. I really hope you guys can 
help. It is kind of shameful.
    You guys know what I am talking about. The Trial Lawyers of 
America, I think one of the hearings that we had several months 
ago said they have spent over $1 billion--$1 billion--doing ads 
on TV. We have all seen them. You think they are doing it for 
the goodness of their heart, to help those Marines and their 
families? Yes, I do not think so. The contingency fees have 
been reported up to 40, 50, 60 percent, so the sick Marine and 
his family get the crumbs after the trial lawyers get 60 
percent. There is no cap on contingency fees in that 
legislation.
    It is shameful. We all know it is shameful. The American 
Legion has come out saying their number one priority is my 
bill. The VFW has come out. I think the DOJ, I think the VA is 
supportive of my bill. Like this should be unanimous consent 
territory.
    Senator King. Does your bill set a cap?
    Senator Sullivan. It does, and we have compromised with 
everybody. It is 17 percent contingency fee cap and 12 percent 
for the filing fee. It is incredibly reasonable. I have moved 
it up almost--well, almost 100 percent because I started at 10 
percent. And remember, this bill--it is not like a big trial 
that the lawyers have to do. It is kind of the defenses of the 
government have been stripped.
    So do you guys have a view on this, and are you warning, 
Mr. Barrans, are you guys warning veterans, the Camp Lejeune 
families? I know the VA has been really concerned about it.
    By the way, the Biden administration Justice Department, 
when he was going through the markup, said, ``This needs caps. 
This needs caps on attorneys' fees.'' And unfortunately some of 
my colleagues on the other side of the aisle made sure there 
were no caps. Trial lawyers are loving it, loving it. But my 
goodness, you want to talk about scamming. You want to talk 
about hurting families. I mean, you want to talk about a zero-
sum game. Either the Marines and their families get a nice 
benefit, which is what they have earned because we have a lot 
of sick Marines from Camp Lejeune, or the trial lawyers get a 
bigger cut.
    I have never dealt with an issue that is so black and 
white, that should be fixed, and I cannot get my colleagues to 
agree to it. The Justice Department of the Biden administration 
wanted it. What do you guys think?
    Mr. Barrans. Thank you, Senator. I do not know that VA has 
been asked for views on that bill.
    Senator Sullivan. I think they have. I think you guys are 
supportive, but maybe you can come back to the Committee.
    Mr. Barrans. Yes----
    Senator Sullivan. I know you want caps.
    Mr. Barrans [continuing]. We will come back.
    Senator Sullivan. I know you want caps, contingency fee 
caps like you do for tort claims against the government. 
Federal law caps those.
    Mr. Barrans. Well, certainly on that bill I would defer to 
any views we have already provided, and I would be happy to 
circle back with you on that.

    [VA response to Senator Sullivan appears on page 73 of the 
Appendix.]

    Senator Sullivan. But are you not worried? Have you seen 
the ads?
    Mr. Barrans. Yes.
    Senator Sullivan. You cannot help but see the ads.
    Mr. Barrans. We have all seen the ads, yes, and we are very 
concerned about those issues.
    Senator Sullivan. Do you think those law firms are really 
doing it out of the goodness of their hearts to take care of 
the sick Marines and their families?
    Mr. Barrans. There certainly seems to be potential for 
predatory practices there.
    Senator Sullivan. Yes, there is.
    Mr. Barrans. We are concerned about anything that will 
deplete veterans' enjoyment of the benefits that they have 
earned and similar things like that.
    We would emphasize that the Camp Lejeune provisions in the 
PACT Act do not relate to VA benefits.
    Senator Sullivan. I know, but they relate to veterans.
    Mr. Barrans. Right. We----
    Senator Sullivan. I know this is a little bit off topic, 
but it is not really off topic. This is the Veterans Affairs 
Committee.
    Senator King. That never stopped you before.
    Senator Sullivan. Well, I am very passionate about this 
topic, because I think it is just a straight-up right-wrong 
issue. And I know my colleagues, you know, the trial lawyers 
have a lot of influence with the Democratic Party, but a choice 
between trial lawyers, sick Marines and their families, it 
should be 100 to zero. And I cannot seem to move it--a little 
bit frustrating for me.
    Any other thoughts on that, just that issue in general, 
from anyone?
    Mr. Boerstler. And Senator----
    Senator Sullivan. Not my bill but just like, come on, $1 
billion of ads on TV?
    Mr. Boerstler. I know you and I spoke about it at the PACT 
Act hearing last fall, and that is right after we set up the 
FAQ documents and VA.gov/camplejeune is to address this very 
issue.
    Senator Sullivan. Perfect.
    Mr. Boerstler. And we know that that is not reaching 
everyone, so we are making sure we are doing print media, we 
are doing radio, we are doing TV, obviously not as much as has 
been invested by many of the other commercials.
    Senator Sullivan. You are definitely outgunned.
    Mr. Boerstler. But we are working toward that. And we can 
only get there with jointness across the Federal enterprise and 
with our VSO partners, our state partners, our local county 
partners, and your offices in your states, and we appreciate 
you all's help in that.
    Senator Sullivan. Well, like I said, the American Legion 
and the VFW have made this their resolution that this is one of 
their top priorities. I think it is their top priority, because 
they are worried--and John, you guys are doing this because you 
are worried as well. Like you testified last fall. Correct?
    Mr. Boerstler. Yes, sir, and we want to make sure that our 
veterans and their families know exactly where to go if they 
encounter different scam and fraud techniques related to Camp 
Lejeune or unrelated, and that is part of this broader 
awareness campaign that we are approaching from an all-
government perspective.
    Senator Sullivan. Okay. Well, I am just going to say to the 
Committee, I know the Chairman is not here, but to his staff 
and everything, this is a no-brainer. It is a no-brainer. And I 
have compromised to get the numbers up, because some of my 
Democratic colleagues wanted the contingency fees to be higher. 
Okay, I compromised. Seventeen percent is very generous. Dick 
Durbin's argument, ``Oh, you will not get good lawyers unless 
it is 30 percent.'' No offense, that is BS. Seventeen percent 
is fine. Twelve percent for filing? My goodness, a monkey could 
file some of these fees. And we should just do that, 
compromise, and take care of these Marines and these families.
    Time is a-wasting, right? I mean, how long do they have to 
file?
    Senator Sullivan. I think it is two years.
    And is that right? Do you guys know?
    Mr. Barrans. I am sorry. I do not know that.
    Senator Sullivan. So anyways, but time is wasting, and I 
just think it is kind of a--this is about scams to veterans. 
This is a scam right in front of us. We could fix this 
tomorrow, and unfortunately I am getting roadblocks by some of 
my Senate colleagues, and that is just not right, in my view. 
It is not even close to being right. I have compromised. I 
think we need to move the bill.
    But if the VA can come back and say, ``Hey, 17 percent, 12 
percent, we think that is fair,'' if you guys could officially 
mention--I think you have already been supportive--I think that 
would be really helpful. Could you guys do that, or just take a 
look? I am not telling to----
    Mr. Barrans. Yes, yes, absolutely. We would be happy to 
take a look. And again, if we have provided views before, we 
can circle back with you and confirm.
    Senator Sullivan. Great. Okay. Thank you, Madam Chair.
    Senator Hirono. I think that does it for this hearing. And 
I have to say, trial lawyers may have influence but apparently 
not as much influence as the NRA around here.
    Senator Sullivan. Senator Hirono never takes the chance to 
get the last word. So let me just try and get the last word. 
Would you support my bill, or are you trying to block it?
    Senator Hirono. I have not seen your bill, Senator.
    Senator Sullivan. Why don't you take a look at it. It is 
really important.
    Senator Hirono. And these kinds of cases, lawyers have to 
show----
    Senator Sullivan. It is really important.
    Senator Hirono [continuing]. Negligence, and you have to 
show damages.
    Senator Sullivan. You do not have to show--no, read the 
bill. Understand the bill----
    Senator Hirono. And if you do not have----
    Senator Sullivan [continuing]. Understand the legislation.
    Senator Hirono. See, this is what happens when two 
lawyers----
    Senator Sullivan. This is such a no-brainer, and the only 
reason----
    Senator Hirono. Usually when something is a no-brainer----
    Senator Sullivan [continuing]. The only reason it is not 
moving is because----
    Senator Hirono [continuing]. Is because there is more to 
it.
    Senator Sullivan [continuing]. Of the support of the trial 
lawyers in your party.
    Senator Hirono. I wish I had a gavel. I am closing this 
hearing. Oh, here it is. Yay.
    Okay. This hearing is closed, but I would like to thank the 
witnesses.
    Calm down. Wow.
    So with the information we have collected today I think we 
have a lot of work ahead of us to stay on top of the various 
scams and frauds targeting veterans, and we need to ensure we 
are doing everything in our power to make sure veterans are not 
losing their benefits, identity, life savings, or credit 
worthiness to the predators looking to take advantage of them.
    I thank each of you for your service and your continued 
dedication to protecting our veterans as consumers. And we will 
keep the record open for two weeks.
    This hearing is adjourned.
    [Whereupon, at 5:03 p.m., the hearing was adjourned.]


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