Bill to protect veterans from bad loans gets division approval

After numerous reports of loan companies defrauding veterans and their beneficiaries, legislators seek to institute safeguards they believe will help veterans and provide the state’s attorney general with additional power in prosecuting dubious loans.

So-called predatory lenders have deceived military retirees and their beneficiaries in the past by offering pension advancement contracts, or upfront loans, where veterans have used their pensions to pay back loans. The results have been devastating, according to media reports and testimony during Monday’s House Veterans Affairs Division.

Assistant Attorney General Ben Velzen testifies before the House Veterans Affairs Committee Jan. 30 in favor of HF368 sponsored by Rep. Matt Bliss, left, which would prohibit a person from entering or attempting to enter into an agreement with a military beneficiary that assigns the beneficiary’s pay or benefits to another party. Photo by Paul Battaglia

Leveraging military benefits for loans is illegal under federal law, but according to Assistant Attorney General Ben Velzen, there is no enforcement mechanism. Previous attempts at cracking down on these practices have failed in Congress, he added.

WATCH House Veterans Affairs Division discussion of the bill

HF368, sponsored by Rep. Matt Bliss (R-Pennington), would prohibit predatory lenders from breaking federal law and entering into contracts with veterans or their beneficiaries, and allow veterans to void these type of contracts. To put some teeth behind the proposed legislation, the bill would allow the attorney general’s office to enforce its statute-provided authority of investigating and prosecuting these cases.

Approved by the division, the bill heads to the House Commerce and Regulatory Reform Committee. Its companion, SF327, sponsored by Sen. Bruce Anderson (R-Buffalo), awaits action by the Senate Veterans and Military Affairs Finance and Policy Committee.

Rep. Bob Dettmer (R-Forest Lake), the committee chair, said this bill tells veterans, “We’re going to do what’s right and make sure you’re not being taken advantage of.”