When Adan Montalvo, 72, of Lamont, California, was approved for $1,102 in monthly Veterans Affairs (VA) disability payments, he thought his financial worries would ease.
Instead, he quickly found himself being billed $5,500 — five months’ worth of benefits — by the private company that helped to secure his claim.
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“They wanted to collect all of it, and I told them, ‘how am I going to give you money I don’t have?’” Montalvo recalled to CalMatters [1] in a story published Sept. 4.
He agreed to a payment plan with the company, according to the news outlet, but the cost is more than half the value of his disability check, including an interest fee.
The situation begs the question: what are the rules behind charging veterans for assistance in filing benefits claims?
Laws around helping file for VA benefits
Under federal law, only VA-accredited representatives can help veterans file claims and charge a fee. These can include veterans service organizations, claims agents or attorneys. But reps aren’t permitted to charge a fee for helping with a veteran’s initial claim — only services pursuant to the initial decision may be subject to charges.
It’s illegal for unauthorized entities to assist in claims filing and charge a fee, according to the Consumer Financial Protection Bureau (CFPB). Yet enforcement is weak. There are no criminal penalties for violations at the federal level. Some companies and individuals take advantage of this and attempt to coerce veterans into paying hefty fees for claims assistance.
Several states have cracked down on this practice. Stateline reported on Dec. 6, 2024, that three states — Maine, New Jersey and New York — recently passed laws against for-profit consultants, while similar legislation was introduced in 17 other states [2]. Lawmakers in select states, however, have worked toward loosening restrictions.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
It’s unclear if Montalvo was charged for filing an initial claim, but the company that helped him appears to not be accredited.
If you received help from an accredited company or person, and you were charged for filing an initial claim, you can file a complaint with the VA. In addition, if you feel the amount you were charged is unreasonable, you can file a motion for review of the fee. If fees are paid directly out of benefits, typically, an amount up to 20% of past-due benefits is seen as reasonable. Otherwise, fees that don’t come directly from benefits may come under scrutiny if they exceed 33.3% of past-due benefits.
Tools veterans can use
There are a number of resources that veterans can access to help ensure they’re being treated fairly by anybody trying to help them claim benefits, says the CFPB.
1. Find a VA-accredited representative near you: The VA maintains a list of accredited veterans service organizations, claims agents and attorneys across the country. This list can be used to verify whoever you hire is legitimate.
2. Ensure the right forms are filled out: VA forms 21-22 or 21-22A are used to appoint your representative. The VA needs this information on file, and they will inform you if you have an unauthorized representative. There’s a one-time exception for a non-accredited individual to represent you before the VA, as long as they do so free of charge, per the CFPB.
3. Report any frauds and scams: If you believe an organization or person is misrepresenting their status as an accredited entity, or misrepresenting their affiliation with the VA, you can file a complaint with Veterans Affairs, report them to your state’s attorney general and file a report with the Federal Trade Commission.
Beware of unaccredited entities pressuring you into hiring them for claims assistance. Some companies may charge exorbitant fees that can leave veterans financially vulnerable.
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Article sources
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[1]. CalMatters. “Will California ban companies from charging vets to secure benefits? Some say it should”
[2]. Stateline. “States go after ‘claim sharks’ that charge vets for help with disability claims”
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