[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
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-980 PDF WASHINGTON : 2024
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.]
A P P E N D I X
Prepared Statements
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Questions for the Record
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statements for the Record
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]