When disasters such as earthquakes or floods strike the United States, an outpouring of financial and emotional support pours in for the victims. Unfortunately, some people prey upon this type of generosity by defrauding disaster victims, donors, and the government. Disaster-related fraud takes several forms, from bogus websites luring people to make donations to fake construction contractors who extract money from vulnerable homeowners. I was once taken in by a bacon-of-the-month scam artist. I should have known that it was too good to be true!
Another example occurs when merchants hike the prices of supplies that are in high demand by disaster victims. For example, during the recent West Virginia flooding, some merchants, such as local hotels and restaurants, were raising rates for bottled water and toiletries in order to cruelly capitalize on short-term demand. I’ll admit that I once stockpiled pig ears. But I didn’t do it to defraud anyone. I just figured I should have an ample supply.
Avoid Fraudulent Donation Workers and Sites
Some unscrupulous individuals pose as workers for charitable organizations, saying that they are “collecting donations” after a disaster. They will push people to give cash donations which are untraceable and cannot be rescinded. Always ask for identification from volunteers seeking donations, and to be 100% sure of their affiliation, donate directly through the charity’s main website. After Hurricane Katrina, several people were convicted of impersonating Red Cross workers and dozens of fraudulent donation websites were shut down by authorities.
Red Flags to help you spot fake donation sites:
- 100% to victims promise! Genuine charities have overhead, so they can’t possibly give 100% of the donations they collect directly to victims.
- Site and email misspellings and grammar errors. Compare each website with the official website for the charity. And before inquiring on the satellite site, do a search for the email address on the main charity’s website. After Katrina, unscrupulous scammers purchased the domain name @redcross.org and set up an email account email@example.com, a spoofed Red Cross email address which took people to a fraudulent website for “donations.”
- Check the site’s “contact us” information. Legitimate charities will provide phone, email and chat support to connect with potential donors.
- Google to identify fake charities. If an organization’s name sounds unfamiliar, search for it along with the word “scam” to find out if anyone has written news stories or filed complaints with the Better Business Bureau.
Spotting Contractor and Vendor Fraud
Contractor fraud involves someone posing as a qualified contractor. This person will, for example, contact homeowners after a flood and tell them they can repair wood floors or install carpeting on the cheap. Then, they collect deposits from multiple homeowners under the guise of doing work, but simply take the money and run. I have to say that this is abhorrent behavior. And I thought cats were bad!
During Hurricane Sandy, which devastated areas of New Jersey, millions of dollars in taxpayer-funded relief money was fraudulently secured. Some homeowners even pulled from savings or retirement accounts in order to pay contractors, thinking their expenses would be reimbursed. Unscrupulous contractors took advantage of these homeowners and were later indicted on federal charges. The problem prompted the Department of Community Affairs for New Jersey to create a website that educates residents about identifying and preventing contractor-related fraud.
Red Flags for spotting and preventing contractor fraud following disaster:
- The contractor wants a large upfront payment. Contractors can ask for a portion of the funds upfront, but be very wary of anyone who asks for more than 30%.
- Poor Reviews or lack of listing on the Better Business Bureau website. Also, check sites Yelp and Angie’s List.
- Request payment by cash or check. Use a credit card when putting down a deposit, since most credit card companies offer fraud protection. I prefer using Bitcoins for my Amazon dog treat purchases.
- Rushing you into an agreement. If a contractor is pushy or demanding and/or fails to offer a detailed work plan, then they could running a scam.
- Address is out of the area. If the contractor claims to be well-known in the area, make a few hours to follow up on his or her referrals. Many scam artists come into an area from out-of-state to prey on homeowners affected by disasters and then flee the scene.
- Exceptionally low bids. An overeager contractors with a “too good to be true” quote is a warning sign. Even if a low-bid is legitimate, if the contractor is willing to work at such a deeply discounted rate, he or she could have intentionally or carelessly made mistakes when providing the estimate. Many times, these contractors go back to the homeowner to ask for more money when they run out of funds.
Remember that safety is a daily priority. And one of the items you should be careful to safeguard is your money! A convenient and affordable way to make sure you are prepared for disasters and emergencies of virtually every kind is to subscribe to the RJWestmore Training System by Universal Fire/Life Safety Services, which has been designed to help improve and save lives. For more information about the best system out there, or to subscribe, click here.