Disaster Fraud
About
About Disaster Fraud
After a natural disaster hits, communities have to deal with more than just the huge challenge of rebuilding. They also face the hidden danger of disaster fraud. This kind of crime takes advantage of people and institutions when they're at their weakest, using the confusion and urgent needs that come after events like hurricanes, earthquakes, and floods for illegal gain. Disaster fraud can appear in many sneaky ways, affecting different parts of the recovery effort and the money meant to help with it.
This information focuses on some of the primary avenues through which fraud occurs after a disaster including benefits programs fraud, insurance and home repair scams, price gouging, deceptive contractors, identity theft, and charitable solicitation.
Understanding these forms of disaster fraud is the first step toward prevention. The information below delves into each category, offering insights into how these scams are perpetrated and providing practical advice for individuals and communities to protect themselves during the vulnerable times following a disaster.
Types Of Disaster Fraud
Benefits Programs Fraud involves the illicit claim of government or insurance assistance meant for those genuinely affected by the disaster. Fraudsters often file false claims or misrepresent their circumstances to unjustly receive aid, diverting crucial resources away from real victims.
Here's what you need to know:
- Types of Fraudulent Activities:
- False Claims: Individuals or entities claiming they were affected by a disaster to receive benefits for which they are not eligible.
- Misrepresentation: Applicants providing false information or misrepresenting their circumstances to increase the aid they receive.
- Duplication of Benefits: Individuals applying for and receiving disaster aid from multiple sources for the same loss, which is illegal.
- Reporting Fraud:
- Louisiana residents and officials are encouraged to report suspected fraud to the appropriate authorities. Reporting plays a crucial role in preventing fraud and ensuring that aid reaches those who genuinely need it.
- Tips To Avoid Issues With Benefits Programs Fraud:
-
Educate Yourself and Your Community
- Understand the types of disaster assistance programs available and their eligibility requirements.
- Spread awareness about the signs of fraud and the importance of applying for assistance legitimately.
- Safeguard Personal Information
- Protect your personal and financial information. Fraudsters often attempt to gather personal data by posing as government officials or aid workers.
- Be cautious about sharing personal information over the phone or online, especially if you did not initiate the contact.
- Verify Solicitations For Information
- If contacted for information related to disaster relief, verify the identity of the caller or the organization they represent by contacting the agency directly through official channels.
- Use Official channels to apply for aid
- Always use official websites and hotline numbers to apply for disaster assistance. Avoid using intermediaries who offer to apply on your behalf for a fee.
- Report duplicate benefits or overpayments
- If you receive duplicate benefits or notice an overpayment, report it to the relevant agency immediately. This honesty helps ensure resources are allocated to those in need.
- Keep detailed records
- Maintain comprehensive records of your applications, correspondence, and received aid. Documentation is crucial for resolving any discrepancies or audits.
- Be Skeptical of unsolicited offers of help
- Be wary of unsolicited contacts offering to help you apply for benefits or claiming you qualify for aid you haven't applied for. These are common tactics used by fraudsters.
-
Insurance and Home Repair Scams emerge as homeowners seek to repair or rebuild their damaged properties. Scammers posing as insurance agents or contractors offer deals that are too good to be true, often leading to substandard repairs, incomplete projects, or outright theft of funds.
Learn about contractor fraud and scams by clicking here.
Learn about insurance claims after a disaster by clicking here.
Here are some tips to help protect yourself from these types of scams:
- Before Hiring a Contractor:
- Verify Credentials: Always check the contractor's license and insurance. Louisiana requires contractors to be licensed for certain types of work, especially when it involves disaster recovery. You can verify a contractor's license through the Louisiana State Licensing Board for Contractors.
- Ask for References: Request references from past clients, particularly those who had similar work done on their homes. If possible, visit these completed projects.
- Get Multiple Estimates: Obtain at least three bids or estimates for the repair work. This will give you a sense of the going rate for your repairs and help you spot any quotes that are suspiciously low or high.
- Avoid Large Upfront Payments: Be wary of contractors who demand a large down payment before starting work. It's reasonable to pay a small deposit, but substantial payments should be tied to specific milestones in the project.
- Dealing with Insurance:
- Direct Contact: Contact your insurance company directly to report damage. Be suspicious of individuals who approach you claiming to be insurance adjusters or affiliates without verification.
- Documentation is Key: Document all damage with photos and videos before starting repairs. This will be crucial for your insurance claim.
- Understand Your Policy: Be clear on what your insurance covers. Scammers may promise to get you more than what's covered or encourage you to file inflated claims.
- Use Approved Contractors: Some insurance companies have networks of approved contractors. Using these contractors can add an extra layer of protection and ensure the quality of repairs.
- General Red Flags:
- Pressure Tactics: Scammers often pressure homeowners to make quick decisions or sign contracts immediately. A reputable contractor will understand you need time to make a decision.
- Unsolicited Offers: Be cautious of contractors who show up unsolicited, offering to repair your home. Fraudulent contractors often target disaster-stricken areas, looking for victims.
- Request for Cash Payments: Scammers often ask for cash payments or checks made out to individuals instead of the business. This is a red flag for potential fraud.
- Too Good to Be True: If an offer sounds too good to be true, it probably is. Extremely low bids or promises of expedited work might indicate a scam.
- Take Action:
- If you suspect you've encountered a scam, report it to local law enforcement, the Louisiana Attorney General’s Office, or the Better Business Bureau. Taking these steps not only protects you but also helps prevent others from becoming victims.
Price Gouging is another immediate effect of disaster, with essential goods and services becoming scarce. Unscrupulous vendors take advantage of this by significantly marking up the prices of necessities, from water and food to fuel and lodging. Price gouging during disasters is a predatory practice that targets those who are most vulnerable. By staying informed, preparing in advance, and knowing how to take action, you can protect yourself and your community from being exploited during difficult times.
Here are some tips on how to deal with price gouging:
- Stay Informed
- Know the Laws: Familiarize yourself with state laws regarding price gouging. Many states, including Louisiana, enact price gouging laws once a state of emergency is declared, making it illegal to hike prices excessively.
- Recognize the Signs: Understanding what constitutes price gouging can help you identify it. While prices can legally increase due to higher demand or lower supply, exorbitant hikes without justification are typically illegal during emergencies.
- Prepare In Advance
- Emergency Supplies: Keep a stock of essential supplies such as water, non-perishable food, medications, and fuel. This reduces the need to purchase these items at inflated prices during a disaster.
- Research Prices: Know the average prices of essentials beforehand. This knowledge will help you recognize inflated prices.
- Take Action
- Report Price Gouging: If you suspect price gouging, report it to the appropriate authorities. In Louisiana, complaints can be filed with the Attorney General's office. Provide as much detail as possible, including the name and location of the vendor, the product or service, the price, and any comparisons to typical prices.
- Keep Records: Save receipts and take note of the prices of goods and services. This documentation can be crucial for investigations into price gouging.
- Look for Alternatives
- Community Resources: In times of disaster, local communities often band together to provide for one another. Look for community centers, churches, or shelters that may be offering essentials at no or low cost.
- Use Social Media and Apps: Social media groups and community apps can be valuable resources for finding information on where to get necessities without being price gouged. Neighbors often share tips on where to find fuel, water, or accommodations at fair prices.
- Educate Others
- Spread Awareness: Share information with friends, family, and neighbors about price gouging laws and how to report it. The more people are aware, the less likely they are to be exploited.
Deceptive Contractors promise speedy repairs or clean-up services, exploiting homeowners' urgency to restore normalcy. These individuals often demand upfront payments, only to deliver poor quality work or vanish with the funds altogether.
Learn about contractor fraud and scams by clicking here.
Here are some strategies to protect yourself from falling victim to such scams:
- Vet Contractors Thoroughly:
- Research and Verify: Before hiring anyone, research their business reputation online, check reviews, and verify their credentials. Ensure they have a valid license and insurance appropriate for the work they claim to do.
- Ask for References: Request references from previous clients, especially for similar disaster repair or clean-up projects, and follow up with those references to verify the contractor's reliability and quality of work.
- Understand the Warning Signs
- Upfront Payments: Be cautious of contractors who insist on large upfront payments before starting any work. While some deposit may be standard, it should not be a significant portion of the total cost.
- High-Pressure Sales Tactics: Scammers often pressure homeowners to make quick decisions, exploiting their desire to return to normalcy. A trustworthy contractor will allow you time to decide.
- Unsolicited Offers: Beware of contractors who approach you unsolicited, especially those who claim to have leftover materials from a nearby job or who can start work immediately.
- Secure Your Agreement:
- Written Contracts: Always insist on a detailed written contract that outlines the scope of work, materials to be used, timelines, payment schedule, and warranties. This document should also include the contractor's contact information.
- Avoid Cash Deals: Pay with checks or credit cards to create a transaction record. Avoid paying in cash, and never make the check out to an individual when dealing with a company.
- Escrow Payments: For significant repairs, consider using an escrow account to manage payments. This ensures that the contractor gets paid for completed work stages before receiving the entire amount.
- Take Precautionary Steps:
- Permits: Ensure that the contractor obtains the necessary permits for the work. Failure to do so can indicate a scam or result in your project not meeting local building codes.
- Monitor the Work: Keep an eye on the progress of the work and maintain communication with the contractor. Don’t hesitate to raise concerns if the work doesn’t match the agreement.
- Report Suspicious Behavior:
- State and Local Authorities: If you encounter a scam, report the contractor to state and local consumer protection offices, the Better Business Bureau, and, if applicable, the state's contractor licensing board.
- Spread the Word: Share your experience with neighbors and local community groups to prevent the scammer from exploiting others.
Identity Theft sees an uptick as fraudsters steal personal information from victims, who may inadvertently expose sensitive data while seeking aid or services in the chaotic aftermath of a disaster.
Here are some tips to protect yourself from identity theft after a disaster:
-
Guard Your Information
- Be Cautious with Personal Info: Be wary of unsolicited requests for your personal or financial information. Legitimate organizations will not ask for sensitive details through insecure channels.
- Secure Documents: Keep your important documents in a secure, waterproof, and fireproof container. If you need to evacuate, consider taking this container with you or storing documents in a secure cloud-based service.
-
Verify Identities
- Confirm Identities: Before sharing any personal information, confirm the identity of the person or organization requesting it. Contact the organization directly using contact information you find independently.
- Watch for Impersonators: Be aware that fraudsters may pose as government officials, insurance agents, or charity workers. Government agencies typically send correspondence by mail and do not ask for personal financial information over the phone or via email.
-
Monitor Your Accounts
- Regularly Check Statements: Keep a close eye on your bank statements, credit card statements, and any other financial documents for unauthorized transactions.
- Consider a Credit Freeze: If you suspect your information has been compromised, consider placing a freeze on your credit reports. This prevents thieves from opening new accounts in your name.
-
Seek Legitimate Assistance
- Use Trusted Resources: Only seek disaster assistance from recognized government agencies and reputable organizations. The official FEMA website, for example, is a safe place to start for federal aid.
- Secure Communication: When applying for aid or services online, ensure that the website is secure (look for "https" in the URL and a padlock symbol).
-
Report Suspicious Activity
- Report Identity Theft: If you suspect your identity has been stolen, report it immediately to the Federal Trade Commission (FTC) at IdentityTheft.gov. Also, alert your bank, credit card issuers, and the three major credit reporting agencies (Equifax, Experian, and TransUnion).
-
Stay Informed
- Educate Yourself: Familiarize yourself with common post-disaster scams. Awareness is one of your best defenses against identity theft.
Charitable solicitation after a disaster involves efforts by individuals or organizations to collect money or goods intended to help those affected by natural disasters or catastrophic events. While many of these solicitations are legitimate and play a crucial role in disaster recovery, the chaotic aftermath of such events also opens the door for fraudulent activities.
Here's a closer look at charitable solicitation in these contexts and tips on navigating these situations:
Recognizing Legitimate vs. Fraudulent Solicitations
- Transparency: Legitimate charities are transparent about their mission, how donations are used, and their tax-exempt status. They should readily provide this information upon request.
- Credentials: Check if the charity is registered with state or federal agencies, such as the IRS or the state's attorney general's office. Registration usually indicates legitimacy.
- Research: Use reputable charity evaluation platforms like Charity Navigator, GuideStar, or the Better Business Bureau's Wise Giving Alliance to verify the charity's standing and efficiency.
- Solicitation Methods: Be wary of aggressive tactics, unsolicited emails, or calls asking for donations, especially if they pressure you to act quickly or pay in cash, by wire transfer, or gift cards.
Tips for Safe Charitable Giving After a Disaster
- Don't Rush: Take your time to research the charity before donating. Fraudsters count on impulsive decisions made in the heat of the moment.
- Direct Donations: Whenever possible, donate directly to the charity through their official website or by phone, rather than through a third party or link sent via email or text message.
- Payment Methods: Use payment methods that offer traceability and protection, like credit cards. Avoid cash donations or wire transfers to individuals you do not personally know.
- Privacy Protection: Do not share personal or financial information over the phone or via email unless you initiated the contact and are certain of the charity's legitimacy.
- Report Suspicions: If you encounter a scam, report it to the authorities, including local law enforcement, the state attorney general's office, or the Federal Trade Commission (FTC). Reporting helps prevent others from being defrauded.