To amend title 38, United States Code, to clarify the applicability of the prohibition on assignment of veterans benefits to agreements regarding future receipt of compensation, pension, or dependency and indemnity compensation, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Benefits and Pensions 
Protection Act of 2003''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) In exchange for a lump-sum payment from a lender, some 
        veterans are surrendering their rights to full future 
        compensation benefits from the Department of Veterans Affairs 
        by assigning those benefits to lenders.
            (2) Despite language in section 5301 of title 38, United 
        States Code, that states that payments of veterans' benefits 
        from the Department of Veterans Affairs shall not be assignable 
        and shall be exempt from the claim of creditors, lenders are 
        entering into contracts with veterans that require the veteran 
        to either give access to their benefit monies to the lender or 
        pay the lender a percentage of their benefit payment each 
        month.
            (3) The contracts for these credit transactions do not 
        disclose information that is required to be disclosed under the 
        Truth in Lending Act, including the amount financed, the 
        finance charge, and the annual percentage rate (APR). 
        Therefore, when signing the contract, the veteran cannot 
        accurately determine the cost of credit obtained by the 
        veteran.
            (4) As a result, those transaction agreements are 
        detrimental to veterans as they are required to pay interest 
        rates ranging from 39 percent to 106 percent.
    (b) Purpose.--The purpose of this Act is to clarify the definition 
of a veterans benefit assignment under section 5301 of title 38, United 
States Code, in order to make illegal the credit transactions between 
veterans and lenders in which the veteran gives the lender access to 
benefits payments either through an account or by the guaranteeing of 
monthly payments.

SEC. 3. APPLICABILITY OF PROHIBITION ON ASSIGNMENT OF VETERANS BENEFITS 
              TO AGREEMENTS ON FUTURE RECEIPT OF CERTAIN BENEFITS.

    (a) In General.--Section 5301(a) of title 38, United States Code, 
is amended--
            (1) by inserting ``(1)'' after ``(a)'';
            (2) by designating the last sentence as paragraph (2); and
            (3) by adding at the end the following new paragraph:
    ``(3)(A) For the purposes of this subsection, an agreement 
described in subparagraph (D) shall be deemed to be an assignment and 
is prohibited.
    ``(B) An agreement or arrangement for collateral for security for 
an agreement that is prohibited under subparagraph (A) is also 
prohibited.
    ``(C)(i) A person who enters into an agreement that is prohibited 
under subparagraph (A), or into an agreement or arrangement that is 
prohibited under subparagraph (B), shall be fined under title 18, 
imprisoned for not more than one year, or both.
    ``(ii) This subparagraph does not apply to a beneficiary with 
respect to compensation, pension, or disability and indemnity 
compensation to which the beneficiary is entitled under a law 
administered by the Secretary.
    ``(D) An agreement described in this subparagraph is an agreement 
between a person who is a beneficiary entitled to compensation, 
pension, or dependency and indemnity compensation and another person 
under which such other person acquires for consideration the right to 
receive payment of such compensation, pension, or dependency and 
indemnity compensation, as the case may be, whether by payment from the 
beneficiary to such other person, deposit into an account from which 
such other person may make withdrawals, or otherwise.''.
    (b) Effective Dates.--(1) Subparagraphs (A) and (B) of paragraph 
(3) of section 5301(a) of title 38, United States Code (as added by 
subsection (a) of this section), shall apply with respect to any 
agreement or arrangement described in those subparagraphs, whether 
entered into before, on, or after the date of the enactment of this 
Act, and any such agreement or arrangement entered into before the date 
of the enactment of this Act is void and unenforceable as of such date.
    (2) Subparagraph (C) of such paragraph shall apply with respect to 
any agreement or arrangement covered by such subparagraph that is 
entered into on or after the date of the enactment of this Act.
    (c) Outreach.--The Secretary of Veterans Affairs shall, during the 
five-year period beginning on the date of the enactment of this Act, 
carry out a program of outreach to inform veterans and other recipients 
or potential recipients of compensation, pension, or disability and 
indemnity compensation benefits under the laws administered by the 
Secretary of the prohibition on the assignability of such benefits 
under law. The program shall include information on various schemes to 
evade the prohibition, and means of avoiding such schemes.
    (d) Authorization of Appropriations.--There is hereby authorized to 
be appropriated for the Department of Veterans Affairs for each of 
fiscal years 2004 through 2008 the amount of $3,000,000 for purposes of 
carrying out the program of outreach required by subsection (c).

Summary: Veterans Benefits and Pensions Protection Act of 2003 - Includes as a prohibited assignment of veterans' benefits any agreement entered into by a beneficiary under which another person acquires for consideration the right to receive any compensation, pension, or dependency and indemnity compensation of such beneficiary. Provides criminal penalties for violations. Directs the Secretary of Veterans Affairs to conduct an outreach program to inform veterans and other potential recipients of such compensation or pension of the prohibition against the assignment of such benefits, including information on various schemes to evade the prohibition and means of avoiding such schemes.