Treble damages available to veterans

As of Jan. 1, 2023, an action on behalf of or for the benefit of a veteran to redress unfair or deceptive acts or practices or unfair methods of competition may allow for increased damages. Civil Code § 3345 provides the increase may be as much as three times what would otherwise be awarded.

What is a veteran?

There are many definitions of the word “veteran” in California law. The one that applies in the context of Civil Code § 3345 is the definition in Government Code § 18540.4: “Veteran” means: Any person who has served full time in the armed forces in time of national emergency or state military emergency or during any expedition of the armed forces and who has been discharged or released under conditions other than dishonorable.”

Why does the statute provide increased relief for veterans?

According to the legislative history of AB 1730, codified in Civil Code § 3345, a study by the American Association of Retired Persons (AARP) revealed that veterans, members of the military and their families continue to be significantly targeted by con-artists and are losing money more than non-military/non-veterans when approached about scams. Some pretend to be from the Department of Defense or the Department of Veterans Affairs to gain the confidence of veterans. The scammers use specific military jargon or veteran-related information to prey on veterans. They are nearly 40% more likely than non-military/non-veterans to lose money to scams and fraud. A February 2022 article by Aaron Kassraie in an AARP online newsletter reports the number of fraud attacks against veterans, military members and their spouses jumped 69% compared to the previous year, resulting in financial losses of $267 million. Complaints were against credit bureaus, bankers, lenders and others.

The PACT Act

An AARP survey suggested that many veterans are not aware that PACT Act claims can be filed for free. The Act expanded health care and other benefits to an estimated five million veterans exposed to toxins during the Vietnam and Gulf Wars and post-911 eras. Thus, older veterans are usually targeted. AARP’s Fraud Center states that criminals are exploiting veterans’ lack of awareness around filing and obtaining PACT Act benefits by offering assistance with fake promises of high payoffs. One in six veterans surveyed revealed they had been contacted by someone offering PACT Act assistance. Once the claim is filed, predators either steal the benefits or charge them phony fees for filing the claim.

Imposter and other scams

Crooks approach veterans by posing as someone or something else. They present bogus investment opportunities in day trading, commodities and other fake investment products. They like to use salespersons with military backgrounds and misuse military seals.

The Federal Trade Commission [FTC] launched a website in 2020 where people can report fraud and other illegal business practices. The legislative history of Civil Code § 3345 states that in the FTC’s 2020 report on data it received from the website, 114,808 military retirees and other veterans made a report. Of those reports, 41,579 were for fraud. The total fraud loss reported was $66 million.

A 2021 AARP report written by Jennifer Saur and Pete Jeffries states that imposter scams, prizes/sweepstakes/lottery cons and travel/vacation/ timeshare, mortgage foreclosure relief and debt management rip-offs were among the most frequent fraud complaints filed with the FTC by veteran and military consumers. Among the seven categories of identity-theft complaints were government documents or benefits fraud, credit card fraud, and employment and tax-related fraud.

Charity cheats

A 2018 AARP report states that American Disabled Veterans Foundation, Healing Heroes Network, Veterans Fighting Breast Cancer and Military Families of America all sound like just the kind of organizations that generous Americans rush to support. AARP reports they are all sham charities that federal and state watchdogs have sued in recent years for misleading donors, according to the FTC.

In addition, California’s Attorneys General have investigated fraudulent charities and warned about scams targeting veterans. In 2012, Help Hospitalized Veterans, a California charity, paid a $2.5 million fine after being sued by then-Attorney General, now Vice-President, Kamala Harris for improperly diverting funds meant to help wounded veterans. Former Attorney General Xavier Becerra and current Attorney General Rob Bonta have both issued consumer alerts warning veterans, service members, and their families of scams targeting them.

Examples of penalty/punishment relief

Many California statutes provide for specific penalties for deceptive, abusive or fraudulent acts. A few examples: Under the California Consumer Financial Protection Law [CCFPL], Financial Code § 90012 (c) sets a penalty not to exceed $5,000 for each day during which a violation continues and not to exceed $25,000 a day if the defendant acts recklessly. Civil Code § 1798.150 provides for damages in an amount not less than $100 and not greater than $750 per incident of violation of breaches of personal information. Health and Safety Code § 1430 states that actions against nursing homes for injunction or civil damages, or both, may be prosecuted by the Attorney General in the name of the people of the State of California upon the Attorney General’s own complaint or upon the complaint of a board, officer, person, corporation, or association, or by a person acting for the interests of itself, its members, or the general public; a $500 penalty may be assessed for each violation.

Business and Professions Code § 17206.1 provides for penalties of $2,500 for each violation of the § 17206 unfair competition statute for acts perpetrated against senior citizens or disabled persons in actions brought by prosecutors. Business and Professions Code § 17510.87 provides that those who solicit funds for charitable purposes are prohibited from retaining more than 50% as a fee, and are subject to a penalty in the amount of the excess fee.

Civil Code § 3294 provides that in non-contract actions for breach of an obligation, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.

How Civil Code § 3345 works for veterans

Civil Code § 3345 applies in actions brought by or on behalf of veterans to redress unfair or deceptive acts or practices or unfair methods of competition. As noted above, the statute only pertains to veterans as defined in Government Code § 18540.4.

Whenever a trier of fact is authorized by a statute to impose either a fine, or a civil penalty or other penalty, or any other remedy the purpose or effect of which is to punish or deter, and the amount of the fine, penalty, or other remedy is subject to the trier of fact’s discretion, the trier of fact shall consider the following factors:

(1) Whether the defendant knew or should have known that their conduct was directed to one or more veterans.

(2) Whether the defendant’s conduct caused one or more veterans to suffer: loss or encumbrance of a primary residence, principal employment, or source of income; substantial loss of property set aside for retirement, or for personal or family care and maintenance; or substantial loss of payments received under a pension or retirement plan or a government benefits program, or assets essential to the health or welfare of the veteran.

(3) Whether one or more veterans were substantially more vulnerable than other members of the public to the defendant’s conduct because of age, poor health or infirmity, impaired understanding, restricted mobility, or disability, and actually suffered substantial physical, emotional, or economic damage resulting from the defendant’s conduct.

Whenever the trier of fact makes an affirmative finding in regard to one or more of the factors set forth in (1) to (3), the trier of fact may impose a fine, civil penalty or other penalty, or other remedy in an amount up to three times greater than authorized by the statute, or, where the statute does not authorize a specific amount, up to three times greater than the amount the trier of fact would impose in the absence of that affirmative finding.

Case authority concerning Civil Code § 3345

Before veterans were added last January, Civil Code § 3345 protected only senior citizens and disabled persons. In Clark v. Superior Court (2010) 50 Cal.4th 605, the plaintiffs were senior citizens who sued an insurance company under California’s unfair competition law, Business & Professions Code § 17200 et seq., alleging deceptive business practices relating to the purchase and sale of annuity contracts. The plaintiffs sought a monetary award, and contended that under Civil Code § 3345, they were entitled to a trebling of the award. In Clark, the California Supreme Court noted that the remedy in private actions brought under the unfair competition laws are generally limited to injunctions and restitution. The court concluded that because restitution is not a penalty, an award of restitution under the unfair competition law is not subject to § 3345’s trebling provision. However, the Clark court also held that § 3345’s trebling provision is not limited to actions brought under the Consumer Legal Remedies Act, Civil Code § 1750 et seq.

In Abbott Laboratories v. Superior Court (2020) 9 Cal.5th 642, a district attorney sued a drug manufacturer in the name of the People of the State of California, alleging violation of unfair competition laws because the drug company intentionally delayed the sale of a less expensive generic drug. The district attorney sought injunctive relief as well as trebled penalties for injuries to senior citizens and disabled persons under Civil Code § 3345. The California Supreme Court held that neither the civil penalties nor restitution were limited to the geographic boundaries of the district attorney’s county.

Conclusion

Veterans receive significantly more robocalls, texts, letters and emails than other civilians from con artists. The scammers tap into veterans’ strong love of country to target their hard-earned pensions and other benefits. Civil Code § 3345 can be utilized by agencies, prosecutors and in private actions to protect veterans from these fraudsters.