WASHINGTON — The Pentagon shares the blame for companies swindling servicemembers, two lawmakers said Thursday during a congressional hearing on a bill aimed at banning the sale of certain types of mutual funds and life insurance on military bases.

“The [Department of Defense] needs to be called on the carpet for this,” said Rep. Ginny Brown-Waite, R-Fla. “Why are they not abiding by their own rule, that being 1344.7? What I think they’re doing is a wink-and-a-nod approach to this, and that’s just wrong. The DOD let them down by letting [servicemembers] be captive audiences. … The DOD has a lot of answering to do. It’s absolutely shameful.”

The cited regulation states, in part, that solicitors are permitted to pitch products so long as they are licensed and are allowed on bases by installation commanders.

Commanders are prohibited from “solicitation of recruits, trainees, and transient personnel in a ‘mass’ or ‘captive’ audience, making appointments with or soliciting military personnel who are in an ‘on-duty’ status, [and] soliciting without appointment in areas utilized for the housing or processing of transient personnel, in barracks areas used as quarters, in unit areas, in family quarters areas, and in areas provided by installation commanders for interviews by appointment.”

These provisions are regularly violated, Brown-Waite said.

The DOD could not provide comment by press time.

Army Spc. Brandon Conger, 20, testified that he lost $2,000 when he invested in a mutual fund through American Amicable Life Insurance of Texas.

In his third week of basic training at Fort Benning, Ga., Conger said his drill sergeants assembled his platoon to meet with “financial advisers,” and those drill sergeants even encouraged the young solders to make “the good investment” and that they’d “make lots of money,” he said.

“The experience was a disappointing ordeal for me and my fellow soldiers. Not because I lost money, but because of the misrepresentation of a former soldier who used his contact to gain the trust of young soldiers,” said Conger, now with 2nd Battalion, 325th Aviation Regiment of the 82nd Airborne Division.

Some companies hire military retirees who then pass themselves off as financial advisers — as opposed to salespeople — and convince young members to buy services they can’t afford, don’t need or offer such little value for the high premiums that they no longer are sold on the commercial market, witnesses and lawmakers said.

The Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the House Financial Services Committee held a hearing Thursday to address a bill introduced by Rep. Max Burns, R-Ga., that would ban the sale of questionable financial products such as life insurance and mutual funds on military bases, both in the United States and overseas.

Beyond laying blame on the insurance companies, which lawmakers and witness labeled as “a few bad apples” in the business, Rep. David Scott, D-Ga., joined Brown-Waite in blaming the military for failing to protect the typical victim, the young, unassuming servicemember with a median age of 24 years and earning less than $30,000 a year.

“There’s an apparent collusion going on within the military itself,” Scott said. “It’s shameful that these unscrupulous, shall we say insurance agents, are allowed to go into barracks [to speak] to confused soldiers under pressure, training and preparing to go overseas to risk their lives, and they are swamped with very complex financial details, life insurance and contractual plans. … What is so disturbing is that these are veterans taking advantage of young enlisted men.”

Industry representatives also testified in support of Burns’ bill to an extent, but warned that language that is too broad could hurt companies who do provide legitimate and appropriate services.

Lawmakers and industry representatives said the military should provide better financial education to troops, letting them know that a young member with no dependents doesn’t need long-term life insurance, for example.

Commanders keep lists of solicitors banned from their bases, but rarely share those with other base commanders, officials added.

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