A booming industry that charges veterans for help in obtaining the benefits they earned through military service must shut down or dramatically change its business model in California by the end of the year under a new law Gov. Gavin Newsom signed Tuesday.
The law prohibits unaccredited private companies from billing former military service members for help with their Department of Veterans Affairs claims.
Technically, it was already illegal under federal law to charge veterans for that work, but Congress 20 years ago removed criminal penalties for violations, and scores of private companies emerged, offering to speed up and maximize benefit claims.
“We owe our veteran community a debt of gratitude — for their years of service and sacrifice," Newsom said in a written statement. "By signing this bill into law, we are ensuring veterans and service members get to keep more money in their pockets, and not line the coffers of predatory actors. We are closing this federal fraud loophole for good.”
Critics call the private companies “claim sharks” because their fees are often five times the monthly benefit increase veterans obtain after using their services. CalMatters in September, for instance, interviewed a Vietnam-era veteran who was billed $5,500 after receiving benefits that would pay him $1,100 a month.
Depending on a disability rating, a claim consulting fee under that model could easily hit $10,000 or more.
“We owe it to our veterans to stand with them and to protect them from being taken advantage of while navigating the benefits they've earned,” said Sen. Bob Archuleta, a Democrat representing Norwalk. Archuleta, a former Army officer, carried the legislation. “This is not about politics; it's about doing what's right. Making millions of dollars on the back of our veterans is wrong. They've earned their benefits. They deserve their benefits.”
California’s new law is part of a tug-of-war over how to regulate claims consulting companies. Congress for several years has been at a stalemate on whether to ban them outright, allow them to operate as they are or regulate them in some other way.
California is among 11 states that have moved to put the companies out of business, while another group of mostly Republican-led states has legalized them, according to reporting by the veteran news organization The War Horse.
That split in some ways reflects the different ways veterans themselves view the companies. The bill had overwhelming support from organizations that help veterans file benefits claims at no cost, such as the American Legion and Veterans of Foreign Wars, as well as from Democratic Party leaders, including former House Speaker Nancy Pelosi of San Francisco.
But the VA’s claims process can take months and sow uncertainty among applicants. Several of the claims consulting companies say they have helped tens of thousands of veterans across the country, and that they have hundreds of employees.
Those trends led some lawmakers to vote against the measure, including Democrats with military backgrounds.
“We're going to say to you, ‘Veteran, you know what, I don't know if you are too stupid or too vulnerable or your judgment is so poor you can't choose yourself,'” said Sen. Tom Umberg, a Democrat and former Army colonel, during a debate over the measure last month.
The new law was such a close call for lawmakers that nine of 40 senators did not vote on it when it passed that chamber last month, which counts the same as a “no” vote but avoids offending a constituency that the lawmaker wants to keep.
It was also one of the 10 most-debated measures to go before the Legislature last year, according to the CalMatters Digital Democracy database. Lawmakers spent 4 hours and 39 minutes on the bill at public hearings in 2025 and heard testimony from 99 speakers.
Two claims consulting companies spent significant sums hiring lobbyists as they fought the bill, according to state records. They were Veterans Guardian, a North Carolina-based company that spent $150,000 on California lobbyists over the past two years; and Veterans Benefit Guide, a Nevada-based company that spent $371,821 lobbying on Archuleta’s bill and a similar measure that failed in 2024.
Those companies view laws like California’s as an existential threat. Both have founders with military backgrounds. Veterans Benefit Guide sued to block New Jersey’s law prohibiting fees for veterans claim consulting, and a federal appeals court sided with the company last year.
"This was the hardest bill I’ve had to work on since I’ve been in the Legislature," said Assemblymember Pilar Schiavo, a Santa Clarita Democrat who supported the law. "We know why that is, because there was so much money on the other side."
Charlotte Autolino, who organizes job fairs for former military service members as the chairperson of the Veterans Employment Committee of San Diego, criticized Newsom’s decision to sign the law. She spoke to CalMatters on behalf of Veterans Benefit Guide.
“The veterans lose,” she said. They lose the option. You’re taking an option away from them and you’re putting all of the veterans into one box, and that to me is wrong.”
But David West, a Marine veteran who is Nevada County’s veterans service officer, commended Newsom. West was one of the main advocates for the new law.
“The veterans of California are going to know that when (Newsom) says he’s taking care of everybody, he’s including us; that he values those 18- and 19-year-olds who are raising their hands, writing a blank check in the form of their lives; to then ensure that they aren’t writing checks to access their benefits,” West said.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
