PREPARED STATEMENT OF THE FEDERAL TRADE COMMISSION

VETERANS CONSUMER PROTECTION: PREVENTING FINANCIAL

EXPLOITATION OF VETERANS AND THEIR BENEFITS

Before the

COMMITTEE ON VETERANS’ AFFAIRS

UNITED STATES SENATE

WASHINGTON, D.C.

APRIL 19, 2023
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I. INTRODUCTION

Chairman Tester, Ranking Member Moran, and distinguished members of the Committee,

I am Monica Vaca, Deputy Director of the Bureau of Consumer Protection at the Federal Trade

Commission (“Commission” or “FTC”).1 I appreciate the opportunity to appear before you today

to discuss fraud and other illegal practices that affect veterans and other members of the military

community.

Combating scams and unlawful tactics aimed at the military community is an important

part of the Commission’s law enforcement agenda. Every year the Commission brings dozens of

cases against companies and individuals for violating consumer protection laws that the agency

enforces. Many of these cases involve schemes perpetrated on the general public—such as

imposter schemes, deceptive advertising, and false promises about jobs and earnings—that use

tactics tailored to the military community as part of a broader fraudulent operation. Other cases

address tactics, such as abusive debt collection and unscrupulous auto sales, that may have an

outsized impact on military consumers. And some scams specifically target the military

community, using false military affiliations or touting bogus offers for veterans in a cynical ploy

to take advantage of servicemembers, veterans, and their families.

The Commission makes the most of the tools at its disposal in its efforts to curb such

nefarious practices. This testimony gives a high-level overview of the FTC’s work to track and

detect military fraud, of enforcement actions and rulemaking initiatives involving the military

community, and of the FTC’s military-specific consumer education and outreach efforts. It also

discusses our robust collaboration with our law enforcement partners, including the Department

1 This written statement presents the view of the Federal Trade Commission. The oral statement and responses to

questions reflect my own views and do not necessarily reflect the views of the Commission or any Commissioner.

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of Defense, the Consumer Financial Protection Bureau, the Department of Veterans Affairs, and

institutions within the Armed Forces.

The Commission will continue to aggressively deploy the resources it has to stomp out

unfair or deceptive practices, including those that prey on veterans, servicemembers, and their

families. But our ability to get money back in the pockets of victims has been severely

constrained as a result of the Supreme Court’s AMG decision,2 which has been a devastating

blow for honest businesses and consumers, including military consumers. The Commission

continues to call for legislation to revive its ability to seek meaningful monetary relief under

Section 13(b) of the FTC Act for consumers harmed by illegal conduct.

II. TRACKING AND DETECTING FRAUD THREATS

The FTC’s enforcement and outreach work often flow from the Commission’s active

monitoring of the marketplace, which allows us to understand, identify, and combat threats to

both military consumers and the public at large.

One of our most powerful tools in obtaining information about fraud is the FTC’s

Consumer Sentinel Complaint Network, a secure online database of consumer reports. Sentinel

includes complaints reported directly to the FTC as well as to dozens of state law enforcement

organizations, other federal agencies, and non-governmental organizations.3 Servicemembers

and military civilians can provide service and installation details, giving vital information to

government agencies, including Department of Defense law enforcers and policymakers.4

2 AMG Capital Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 810, 593 U.S. __ (2021).

3 Contributors include the AARP Fraud Watch Network; the Better Business Bureau; the Consumer Financial

Protection Bureau; the FBI’s Internet Crime Complaint Center; the U.S. Departments of Defense, Education, Justice,

and Veterans Affairs; and the U.S. Social Security Administration. A full list of the data contributors is available at

https://www.ftc.gov/enforcement/consumer-sentinel-network/data-contributors. 4 For example, out of the total reports from military consumers in 2022, 92% included military branch information

and 78% included information about rank.

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The Commission monitors and analyzes Sentinel data with respect to both militaryspecific and other trends. This work informs the Commission’s consumer protection work,

assists our law enforcement partners, and provides public transparency about high-level

complaint patterns. In 2020, the Commission launched a new tool that explores Sentinel data

about problems military consumers are experiencing in the marketplace, including reported

financial losses.5

In 2022, Sentinel received over 195,000 complaints from military consumers, including

over 150,000 reports from veterans and military retirees.6 The military community reported

monetary harm of over $414 million from fraud, an increase of more than 50% from the previous

year.7 The top complaint categories for military consumers were: imposter scams; identity theft;

credit reporting; online shopping and negative online reviews; banks and lenders; debt collection;

bogus investment schemes; scams involving prizes, sweepstakes and lotteries; credit cards; and

auto-related problems.8

We review these complaints to find potential law enforcement targets and witnesses and

to coordinate with federal, state, and local law enforcement partners.

III. ENFORCEMENT WORK

FTC law enforcement actions illustrate some of the ways deceptive or unfair business

practices harm veterans and the broader military community. Our actions have gone after

individuals and companies that have targeted military consumers with false promises of earning

5 See https://public.tableau.com/app/profile/federal.trade.commission/viz/MilitaryReports/Infographic. 6 Consumer Sentinel Data Book, 2022, at 17, https://www.ftc.gov/system/files/ftc_gov/pdf/CSN-Data-Book2022.pdf. Overall, the FTC received over 5.1 million complaints, with people reporting losses of nearly $8.8 billion

to fraud. Id. at 4. 7 This increase occurred even though the FTC received slightly more complaints from military consumers in 2021,

reflecting a substantial increase in the average amount of reported monetary loss. Compare Consumer Sentinel Data

Book, 2022, supra n.6, at 17 with Consumer Sentinel Data Book, 2021, at 17,

https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2021. 8 Consumer Sentinel Data Book, 2022, supra n.6, at 18.

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or investment opportunities, that have deployed deceptive claims and recruiting tactics regarding

for-profit schools, that have engaged in illegal practices related to automobile purchases and

credit products, and that set up sham charities to exploit the public’s desire to help those who

have served. And we have achieved strong relief, shutting down frauds and obtaining substantial

monetary judgments against firms that use illegal tactics.

While the FTC remains vigilant in combatting fraud and other unlawful business

practices, we face difficult challenges ahead. Returning money to defrauded consumers has been

a cornerstone of the FTC’s enforcement work. The Supreme Court’s decision in AMG, which

held that the FTC does not have the ability to obtain monetary relief pursuant to Section 13(b) of

the FTC Act, dealt a massive blow to the Commission’s ability to obtain meaningful monetary

relief for consumers who lost money to lawbreakers. Although the Commission has worked

tremendously hard to use our other legal tools and authorities, the AMG decision has crippled the

agency’s ability to move forward with claims seeking billions of dollars for affected consumers.

A. Deceptive earnings and investment claims.

Some companies target military consumers with military-specific discounts or offers to

lure servicemembers and veterans into deceptive schemes. For instance, in February 2022, the

FTC filed suit against fast-food chain BurgerIM, accusing the chain of targeting veterans with

false promises while withholding information required by the Franchise Rule.9 According to the

complaint, the company touted veteran-specific discount programs to lure people into paying

tens of thousands of dollars to purchase franchises. The FTC alleged that the company pitched

the franchise opportunity as “a business in a box” that required little to no business experience,

downplaying the complexity of owning and operating a restaurant, and it offered unfounded

9 Complaint, United States v. BurgerIM, No. 2:22-cv-00825 (C.D. Cal.),

https://www.ftc.gov/system/files/ftc_gov/pdf/2022.02.07_complaint_filed_002_0.pdf.

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assurances that if a franchisee was unable to open a restaurant, the company would refund the

franchise fee. Although BurgerIM pocketed tens of millions of dollars in such fees, the majority

of the people who paid were never able to open restaurants.

In April 2022, the FTC sent out $23 million in refunds arising out its action against

MOBE Ltd. The Commission alleged that MOBE falsely claimed that its business education

program would enable people to start their own online business and earn substantial income

quickly and easily using a “proven” 21-step system.10 Defendants eventually revealed that their

“proven system” required selling the same memberships to others in the hopes of earning

commissions, with many victims experiencing crippling losses or mounting debts. As part of the

scheme, the defendants created and promoted the “Patriot Funnel System,” targeting veterans

and servicemembers with military-specific online ads and social media posts. The $23 million in

refunds would not have been available under Section 13(b) if the Commission had brought the

case after AMG. Achieving similar results in future actions will be hindered by the Supreme

Court’s decision.

The Commission is using the tools and authorities available to it to try to protect

consumers injured by deceptive earnings claims. The Commission recently issued a Notice of

Penalty Offenses concerning earnings claims,11 which will permit the Commission to seek civil

penalties for misleading earnings claims in some cases. This authority, however, does not

provide a basis for the Commission to recover funds to return to injured consumers. In addition,

Commission staff are continuing work on rulemaking efforts regarding earnings claims,

including reviewing comments received in response to Advance Notices of Proposed

10 Complaint, FTC v. MOBE Ltd., No. 6:180cv0862-ORL-37DCI (M.D. Fla.),

https://www.ftc.gov/system/files/documents/cases/mobe_complaint.pdf. 11 Penalty Offenses Concerning Multi-Making Opportunities (issued Oct. 2021),

https://www.ftc.gov/enforcement/penalty-offenses/money-making-opportunities.

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Rulemaking issued last year seeking comments on the Business Opportunities Rule and a

possible rulemaking regarding deceptive or unfair earnings claims.12

B. Deceptive educational recruitment tactics.

The FTC has taken action against deceptive recruitment practices in the for-profit

educational space. Higher education programs have historically sought to enroll veterans because

of GI Bill educational benefits, including through predatory recruitment methods.13 In 2021,

following a $191 million judgment against the University of Phoenix (“UOP”) that resolved

allegations that the school used deceptive recruitment pitches, the Commission sent payments

totaling nearly $50 million to more than 147,000 students. In addition to the $50 million

distributed as redress, the settlement with UOP required it to cancel $141 million in debts owed

to the school by students harmed by its allegedly deceptive advertising. The FTC alleged that

UOP used misleading advertisements, including ads that falsely claimed that UOP’s corporate

partnerships with companies like AT&T and Allied Barton offered hiring programs for UOP

students who were veterans.14 As in MOBE, this relief would not have been available under

Section 13(b) if the Commission had brought the case after AMG. In another recent action, the

Commission sued Saint James School of Medicine, a for-profit medical school in the Caribbean

that allegedly used false guarantees of student success to lure consumers—including veterans—

into enrolling in its program.15

12 Deceptive or Unfair Earnings Claims, 87 Fed. Reg. 13951 (Mar. 10, 2022); Business Opportunity Rule, 87 Fed.

Reg. 72428 (Nov. 25, 2022).

13 Through the so-called 90/10 rule, Congress capped the percentage of revenue that for-profit schools can earn from

U.S. Department of Education programs at 90 percent. Since GI Bill benefits originally were not included in that

cap, schools had strong incentives to target veterans. Congress closed this loophole in 2021, with the change taking

effect in the beginning of 2023. See 20 U.S.C. § 1094. 14 Complaint, FTC v. University of Phoenix, Inc., No. 2:19-cv-05772-ESW (D. Ariz.),

https://www.ftc.gov/system/files/documents/cases/university_of_phoenix_ftc_v_uop_complaint_signed.pdf. 15 Complaint, FTC v. Human Resource Development Services, Inc., No. 1:22-cv-1919 (N.D. Ill.),

https://www.ftc.gov/system/files/ftc_gov/pdf/DE%201%20-%20Complaint%204142022.pdf.

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Often, illegal recruitment tactics start when their targets are still active duty

servicemembers—and sometimes sooner. In Sunkey Publishing, for example, the FTC’s

complaint charged the defendants with impersonating the military to lure consumers interested in

serving our country to enroll in their schools. According to the complaint, the defendants ran

online ads—such as “Army.com: Enlist, Reenlist, Benefits” and “Join the U.S. Air Force:

Contact a U.S. Air Force Recruiter!”—and employed websites including army.com,

armyenlist.com, and navyenlist.com, even though they had no affiliation with the military.16

Example of website used by Sunkey Publishing

Although the defendants promised to use consumers’ information only for military recruitment

purposes, they sold this information to for-profit schools. The defendants’ sales representatives

also bombarded consumers with calls and texts in which the representatives identified

themselves as being from “Military Verification” and solicited interest in “military friendly

colleges.” And the defendants used the email addresses they collected under the guise of military

16 Complaint, United States v. Sunkey Publishers Inc., No. 3:18-cv-01444-HNJ (N.D. Ala.),

https://www.ftc.gov/system/files/documents/cases/sunkey_filed_complaint.pdf.

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recruitment to advertise other products as well, including online dating, mortgages, credit

services, and scholarships.17

The Commission followed up the Sunkey action by going after an operator of for-profit

schools that bought leads from Sunkey: Career Education Corporation (currently operating as

Perdoceo Education Corporation). In June 2021, the FTC sent nearly $30 million in consumer

redress pursuant to a settlement with the defendants that also required the school to reform its

lead generation practices to ensure compliance with the law.18 This monetary relief, too, would

not have been available under Section 13(b) had the Commission brought this case after AMG.

The agency also participates in an ongoing working group led by the Department of

Veterans Affairs (VA) to inform veterans how to avoid scams, particularly those related to

veterans benefits, and regularly works closely with agencies within the VA to reach veterans.

This includes partnerships with the Veterans Benefit Administration and the VA Privacy Service

to develop webinars, blog posts, and social media about avoiding identity theft, spotting scams,

and raising awareness of frauds targeting veterans who are applying for benefits. The FTC also

continues to engage in information-sharing and other coordination with the VA to ensure

veterans are not targeted with unfair or deceptive practices by for-profit schools.

17 The FTC has aggressively pursued the perpetrators of government impersonation scams. This past September, the

FTC announced a notice of proposed rulemaking that would prohibit the impersonation of government, businesses,

or their officials. FTC Press Release, “FTC Proposes New Rule To Combat Government and Business

Impersonation Scams” (Sept. 15, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/09/ftc-proposesnew-rule-combat-government-business-impersonation-scams. An informal hearing on the proposed rule will take

place on May 4, 2023. FTC Press Release, “FTC To Hold Informal Hearing on Proposed Impersonation Rule” (Mar.

22, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-hold-informal-hearing-proposedimpersonation-rule. 18 FTC Press Release, “FTC Sends Nearly $30 Million in Refunds to People Tricked into Enrolling by School

Operator’s Lead Generators” (June 9, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/06/ftcsends-nearly-30-million-refunds-people-tricked-enrolling-school-operators-lead-generators.

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C. Illegal auto-related and financing practices.

Unlawful sales and financing tactics can have an outsized impact on military personnel

and their families, for example, with respect to motor vehicle sales and financing. Buying a car is

one of the largest financial decisions a person will ever make. Young servicemembers are an

attractive target for unscrupulous auto dealers: Servicemembers have a steady paycheck but often

no or minimal credit history, and a vehicle purchase may be their first big, complex financial

transaction. We have heard from military representatives that recruits may have a tough time

temporarily “turning off boot camp training,” which may make it less likely that they will ask

questions and closely scrutinize offers presented to them. And, given the cost and length of

financing agreements, deceptive auto sales can have serious consequences that last well beyond a

servicemember’s military career.

In two 2017 public events on military consumer protection, representatives from the

Armed Forces repeatedly emphasized that unscrupulous auto sales practices are a major source

of concern.19 Participants highlighted predatory practices including “payment packing” (slipping

unwanted add-ons into a purchase agreement), bait-and-switch tactics, and extra fees.

Stopping these illegal tactics is a top priority for the FTC, and the agency has brought

dozens of enforcement actions against dealers allegedly engaged in these types of practices.20 In

19 See Military Consumer Financial Workshop, Panel 1: Military Consumers’ Experience in Auto Purchase,

Financing, and Leasing (San Antonio, Tex., July 19, 2017), https://www.ftc.gov/newsevents/events/2017/07/military-consumer-workshop; Protecting Military Consumers: A Common Ground

Conference (Los Angeles, Cal., Sept. 7, 2017), https://www.ftc.gov/news-events/events/2017/09/protecting-militaryconsumers-common-ground-conference. See also The Road Ahead: Selling, Financing & Leasing Motor Vehicles,

Panel 1: Military Consumers and the Auto Sales and Financing Process (San Antonio, Tex., Aug. 2, 2011),

https://www.ftc.gov/news-events/events/2011/08/road-ahead-selling-financing-leasing-motor-vehicles/; FTC, Staff

Perspective: A Closer Look at the Military Consumer Workshop at 2 (Feb. 2018) (relaying panelists’ descriptions of

challenges faced by servicemembers in auto transactions and noting some cases FTC has brought to address alleged

unlawfulness in these areas).

20 See FTC, Notice of Proposed Rulemaking: Motor Vehicle Dealers Trade Regulation Rule (June 23, 2022), at 12-

22 (discussing auto industry issues and enforcement actions by FTC, CFPB, and states),

https://www.ftc.gov/system/files/ftc_gov/pdf/P204800%20Auto%20Rule%20NPRM.pdf.

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summer 2022, the Commission issued a notice of proposed rulemaking regarding motor vehicle

dealers, drawing extensively on the FTC’s military consumer protection work in the auto space.21

Among other things, the proposed rule would prohibit a number of misrepresentations that we

understand are particular issues for servicemembers, such as whether vehicles can be moved

across state lines or out of the country, whether and under what circumstances a vehicle may be

repossessed, and whether the dealer or its products or services were endorsed by or associated

with any government agency, including the Department of Defense or its military components.

The FTC is similarly committed to addressing other unfair or deceptive financing

practices that affect servicemembers and veterans. Last summer, the Commission partnered with

a group of 18 states to sue Harris Jewelry, a group of 19 retail stores and related entities, to stop

the defendants from cheating military families with illegal financing and sales practices.22

According to the complaint, the defendants enticed servicemembers by claiming that the

defendants’ in-store financing plan would significantly improve servicemembers’ credit scores

and lower the costs they pay to borrow in the future. The defendants had no reasonable basis for

this claim, which was made without regard to the servicemembers’ credit history or potential

future borrowing or payment actions. The complaint additionally alleged that the defendants

would often add a “Protection Plan” to the financing agreement without the customers’ express

informed consent, misrepresent that their protection plans were not optional or were required,

and fail to provide disclosures required by the Truth in Lending Act and the Military Lending

Act, among other violations of federal and state law.23 The Commission and multistate group

21 See id. 22 FTC Press Release, “FTC and 18 States Sue to Stop Harris Jewelry from Cheating Military Families with Illegal

Financial and Sales Tactics” (July 20, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/07/ftc-18-

states-sue-stop-harris-jewelry-cheating-military-families-illegal-financing-sales-tactics. 23 In November 2022, the Commission joined the CFPB in filing an amicus brief in Louis v. Bluegreen Vacations

Unlimited, Inc., No. 22-12217 (11th Cir.), arguing that a military consumer who alleged that he or she signed a

contract that was void due to violations of the Military Lending Act has standing to sue in federal court.

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obtained an order against the defendants prohibiting them from collecting millions in debt,

requiring them to refund to consumers approximately $10.9 million for purchased protection

plans, to refund overpayments, and to complete their shutdown of operations and dissolution

pursuant to applicable state laws, once they meet the obligations of the order.

Home purchases represent another major purchase for military personnel and civilians

alike, and we have taken action to protect the military community in this area. For example, the

FTC brought an action against one of the nation’s largest refinancers of veteran’s home loans,

alleging that it made misleading claims directed at current and former servicemembers, including

falsely implying a government affiliation.24 According to the complaint, the defendants

misrepresented the costs and potential savings of their refinancing services; implied that the

loans they offered would come from Veterans Affairs or another government source; and falsely

represented that low interest, fixed-rate mortgages were available at no cost. To resolve these

allegations, the company agreed to pay a $7.5 million civil penalty.25

Fraudulent schemes also target the end of the credit lifecycle, and the FTC has a long

history of going after extortionist debt collectors. In our enforcement work, the Commission has

brought actions that successfully shut down collectors that allegedly falsely threatened to take

action under the Uniform Code of Justice against a servicemember who was the victim of

24 Complaint, FTC v. Mortgage Investors Corporation of Ohio, Inc., No. 8:13-cv-1647 (M.D. Fla.),

https://www.ftc.gov/sites/default/files/documents/cases/2013/06/130627mortgageinvestorscmpt.pdf. 25 The Commission also works to ensure that renters, including military consumers, are protected from illegal

practices. This February, the Commission and the CFPB issued a joint request for information on the use of

algorithms and other background screening methods in tenant screening. The request for information specifically

asked whether tenant screening practices have unique impacts on military servicemembers. Joint FTC-CFPB Tenant

Screening Request for Information (Feb. 28, 2023),

https://www.ftc.gov/system/files/ftc_gov/pdf/p235400_tenant_screening_rfi.pdf.

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identity theft, to disclose a purported debt to the consumer’s commanding officer, and to ruin a

consumer’s military career.26

D. Bogus military charities.

Finally, some bad actors exploit the goodwill people have toward the Armed Forces to

take advantage of the general public. For instance, in 2018, the Commission and partners in

every state worked together on Operation Donate with Honor, an enforcement sweep involving

more than 100 actions against bogus charities with names like “Help the Vets” and “Veterans of

America.” The Commission has continued its vigorous enforcement in this area, obtaining orders

in 2020 and 2021 in cases against sham charities using names such as “American Veterans

Foundation” and “Saving Our Soldiers.”27

IV. EDUCATION AND OUTREACH

In addition to the Commission’s law enforcement actions, education and outreach is a

critical part of our consumer protection and fraud prevention work. The Commission’s education

and outreach program reaches tens of millions of people a year, including through agency

websites and social media presence. Recent online consumer alerts, for example, have covered

imposter scams targeting veterans, businesses that charge to assist consumers filing claims for

military benefits (even though help is free through the VA and affiliated organizations), and how

veteran entrepreneurs can spot common scams that target small businesses.28

26 Complaint, FTC v. Bam Financial, LLC, No. 15-cv-0672-JVS-DFM (C.D. Cal.),

https://www.ftc.gov/system/files/documents/cases/151104bamcmpt.pdf; Complaint, FTC v. Goldman Schwartz Inc.,

No. 4:13-cv-00106 (S.D. Tex.),

https://www.ftc.gov/sites/default/files/documents/cases/2013/01/130131goldmanschwartzcmpt.pdf. 27 Complaint, FTC v. Outreach Calling, Inc., No. 1:20-cv-07505-MKV (S.D.N.Y.),

https://www.ftc.gov/system/files/documents/cases/182_3058_outreach_calling_-_complaint.pdf. 28 FTC Consumer Alert, “Imposter scams targeting veterans and servicemembers” (Nov. 16, 2022),

https://consumer.ftc.gov/consumer-alerts/2022/11/imposter-scams-targeting-veterans-and-servicemembers; FTC

Consumer Alert, “Veterans: Filing for benefits is free” (Oct. 26, 2022), https://consumer.ftc.gov/consumeralerts/2022/10/veterans-filing-benefits-free; FTC Consumer Alert, “Veteran entrepreneurs: Spot the scams” (Nov. 2,

2022), https://consumer.ftc.gov/consumer-alerts/2022/11/veteran-entrepreneurs-spot-scams.

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In 2013, the FTC created MilitaryConsumer.gov, a resource to inform servicemembers, veterans,

their families, and the network of professionals that counsel them about fraud and other

consumer issues affecting the Armed Forces. The same year, the FTC worked with the

Department of Defense’s Office of Financial Readiness (DoD FinRed) and the Consumer

Financial Protection Bureau’s Office of Servicemember Affairs to launch the first Military

Consumer Protection Day—which was expanded in 2016 to a full month every year (July). For

the past nine years, the FTC has coordinated with its partners on this initiative to create joint

branding, coordinate messaging, and conduct virtual presentations, webinars, and Facebook Live

events to reach the military and veterans communities. The Military Consumer network of

partners includes federal and state agencies, military agencies, state attorneys general offices,

military relief and support organizations, consumer advocacy groups, and military trade

associations. FTC staff also participates in regular calls with DoD FinRed’s partner network as

well as the quarterly calls hosted by the Military Family Financial Readiness Coalition.

One area of particular educational and outreach focus is identity theft. An FTC analysis

of five years of Consumer Sentinel data suggests that active duty servicemembers experience

highly disproportionate instances of theft from their financial accounts compared to the general

population.29 Identity theft is often carried out by an individual that the victim knows, and

military consumers were twice as likely to report that the perpetrator was a family member or

someone they knew.30 It can also be the result of data breaches and lax data security policies.31

29 FTC Press Release, “Active Duty Servicemember are More likely to Report Identity Theft than Other Adults,

New FTC Data Shows” (May 21, 2020), https://www.ftc.gov/news-events/news/press-releases/2020/05/active-dutyservicemembers-are-more-likely-report-identity-theft-other-adults-new-ftc-data-shows. 30 Nearly 14% of the reports indicate that a family member or someone they knew stole their identity, compared to

just 7% of other adults. Reports indicate that this often happens when people have access to important documents or

financial records left behind during military reassignment.

31 See, e.g., FTC Press Release, “Security Beyond prevention: The Importance of Effective Breach Disclosures”

(May 20, 2022), https://www.ftc.gov/policy/advocacy-research/tech-at-ftc/2022/05/security-beyond-preventionimportance-effective-breach-disclosures.

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And identity theft feeds into many of the frauds discussed above, with active duty

servicemembers reporting problems with credit bureaus at more than twice the rate of other

adults, with reports indicating that many of these complaints emerged from underlying instances

of identity theft.32

Privacy and data security has long been a major area of enforcement in the FTC’s

Division of Identity Protection and Privacy, with dozens of cases brought over the past two

years.33 The FTC complements this enforcement work through coordinating closely with the VA

and other partners to develop and disseminate information about avoiding scams and recovering

from identity theft. For instance, the FTC participates in a valuable ongoing initiative organized

by the Executive Office of the President and Department of Veterans Affairs. This effort

convenes these three stakeholders — along with representatives from the CFPB, the Department

of State, the Department of Education, and others — to collaborate on outreach resources and

activities to alert veterans and their families to evolving scams. Over the years, the FTC has also

given dozens of webinars and presentations to veterans, many hosted by the VA’s identity

protection program and its economic development initiatives. For instance, in January 2023, FTC

staff spoke at the VA’s virtual program, Protecting PACT Act Benefits from Identity Theft

Scammers.

As part of a celebration of Veterans Day in November 2022, FTC staff participated in a

VA program for new veterans and servicemembers transitioning into civilian life in Mississippi

to speak about avoiding scams and identity theft.34 FTC staff spoke at similar events hosted by

32 In 2022, military consumers filed 25,803 complaints about credit bureaus, information furnishers, and report users

(out of a total of 691,142). Consumer Sentinel Data Book 2022, supra n. 6, at 18.

33 See Cases, Privacy and Security Enforcement, https://www.ftc.gov/news-events/topics/protecting-consumerprivacy-security/privacy-security-enforcement (listing cases between 2020 and the present).

34 One resource that the FTC regularly highlights is free electronic credit monitoring services for active-duty

members, required under the FTC’s military credit monitoring rule. Final Rule: Military Credit Monitoring (July 1,

2019), https://www.federalregister.gov/documents/2019/07/01/2019-13598/military-credit-monitoring.

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VA for veterans in Northern California (part of Military Consumer Protection Month 2022) and

in Baltimore (2021). In addition, beginning in fall 2022, the FTC has participated in an ongoing

working group led by the VA to inform veterans how to avoid scams, particularly those related

to veterans’ benefits. To expand the FTC’s reach to veterans, FTC staff has also worked with

AARP and its Veterans & Military Families Initiative on programs for veterans about avoiding

scams and identity theft.35

The FTC also participates in the American Bar Association’s Legal Assistance for

Military Personnel program, in which FTC staff coordinates on legal protections and issues

related to servicemembers, veterans, and their families. Over time this has included leading

trainings and webinars on a diverse array of federal consumer laws and regulations, including the

Military Lending Act,36 Electronic Fund Transfer Act, Equal Credit Opportunity Act, Truth in

Lending Act, Consumer Leasing Act, Fair Credit Reporting Act, the Holder Rule, the Credit

Practices Rule, the Used Car Rule, the Military Credit Monitoring Rule, and many others. These

meetings and trainings have been held on bases around the country, with more recent events held

remotely, particularly during the COVID-19 pandemic.

V. CONCLUSION

The Commission will continue to take action to protect veterans and the broader military

community from fraud and related threats. Combating these practices is an important part of the

35 Events included the following: the AARP Connecticut TeleTown Hall (May 2022), AARP Connecticut Virtual

University (Nov. 2022), AARP Texas and FTC’s Southwest Region webinar (Nov. 2022), AARP Facebook Live

event to promote Identity Theft Awareness Week (Jan. 2023), and AARP Connecticut Virtual University (Feb.

2023). FTC staff also delivered a presentation about helping veterans avoid scams during the AARP-led panel at the

annual conference of the International Association of Financial Crime Investigators (Sept. 2022).

36 In addition to education and outreach efforts, the Commission regularly participates in the Department of

Defense’s interagency task force on the Military Lending Act, which brings together different federal agencies to

address military lending topics.

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FTC’s consumer protection mission, and we will use every tool at our disposal to do so. We look

forward to continuing to work with the Committee and Congress on these urgent issues.

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