Disaster Relief Recovery 101 – Don’t Be the Next Fraud Victim
The devastation of Super Storm Sandy has placed a great deal of economic and mental stress on hundreds of thousands of victims as they work to find basic necessities and rebuild their lives. Such devastation has become a preying ground for fraudsters as they find creative ways to take advantage of the vulnerability of the storm’s victims. Following is a list of schemes and preventive measures to consider to isolate yourself against becoming their next victim:
Scheme: Fraudsters, recognizing your need for financial assistance, will pose as government agency officials, even stating they are representatives of FEMA in an attempt to solicit personal information.
- Be cautious when giving out personal information such as date of birth and social security number.
- Avoid telemarketers or anyone attempting to solicit information. Government agencies do not call or email you nor do they ask for payment to initiate the application process.
- Always require identification from the agency representative. FEMA representatives are required to wear an official government photo ID. If the agency representative is unwilling to supply identification, this is a warning sign and you should not provide any information.
- If you suspect that you have become the victim of identity theft:
- Contact your local authorities to report the crime.
- Contact your financial institutions to cancel credit cards and monitor monthly banking activity.
- Monitor your credit report every three months for the first year and annually thereafter.
UNSCRUPULOUS PUBLIC ADJUSTERS
Scheme: Unscrupulous public adjusters take advantage of homeowners by requiring them to sign contracts giving them an unusually high percentage of the settlement from their homeowners' insurance policy.
- Public adjusters in New York, New Jersey, Pennsylvania, Connecticut and Delaware must be licensed.
- The National Association of Insurance Commissioners (NAIC) has adopted a Model act for public adjusters (NAIC Model No-228) that provides guidelines that govern public adjusters.
- Your state insurance department is available to help. The NAIC can assist you by calling 1.866.470.6242.
- To check licensing or report fraud:
Scheme: Contractors are in great demand, and homeowners are frequently willing to forego the normal screening process in order to expedite the work. Often times the contractor will require “cash only” deals and many times the work is incomplete or not done at all. Unfortunately, the cash and the contractors are long gone before the homeowner can report the incident to the authorities.
Contractors are in great demand, and homeowners are frequently willing to forego the normal screening process in order to expedite the work. Often times the contractor will require “cash only” deals and many times the work is incomplete or not done at all. Unfortunately, the cash and the contractors are long gone before the homeowner can report the incident to the authorities.
- Require the contractor to be bonded and insured. Insurance protects against specific types of losses; however, bonds provide protection if the job is not completed to satisfaction.
- Check for licensing. Most states have a licensing registry for contractors where you can locate the contractor's licensing status. . This site allows you to determine your state licensing requirements, and where to go to validate a contractor's license.
- Check for complaints through the Better Business Bureau or your local government building department. Most local contractors are well known by local government employees who can provide valuable information about the contractor.
- Check references of not only past work, but one or two references of current work.
- Talk to the sub-contractors. Ask if payments are made timely and how they are treated.
- Execute a contract describing specific details of the work to be performed, warranty details, price and payment terms.
FLOODED CAR SALES
Scheme: In an effort to unload obsolete or damaged inventory, unethical auto dealers will dry out flooded vehicles and sell them to unknowing customers.
- When buying a vehicle, look for the following warning signs:
- the vehicle has a damp or musty smell.
- Water marks under the rugs or in the trunk.
- Scratches on the Vehicle Identification Number.
- Lower than expected sticker price.
- Obtain a vehicle history report from a service such as Carfax.
- Visit The National Motor Vehicle Title Information System's database run by the Department of Justice. This is a national database that has car titles and records when a car gets totaled or salvaged
- Check the Better Business Bureau or the National Auto Dealers Association at 1.800.252.6232, to obtain information about a particular auto dealer.
FAULTY EQUIPMENT SALES
Scheme: Fraudsters are selling faulty equipment such as generators and power tools. Typically these are cash transactions without any customer recourse when the equipment is not functioning properly. This type of crime is low on law enforcement’s priority list, and, therefore, the perpetrators are long gone before authorities are notified.
The best defense against this scam is to buy only from someone that offers a warranty and does not require “cash only” deals.
Although you may not have been a victim of Hurricane Sandy’s devastation, you may have the desire to help those in need through contribution to “charitable relief efforts.” Unless you are donating to a well-known, established organization such as the Red Cross, you should carefully scrutinize the legitimacy of the alleged organization.
Scheme: Fraudsters take advantage of the generosity of others through false solicitations and by posting websites that appear realistic. There are reports that over 1,000 domain names have been registered with the words “Sandy” or “Relief” as part of the name.
- Verify the tax exempt status on the IRS website “Exempt Organizations Select Check” or verify the charity’s legitimacy by reviewing IRS form 990.
- Verify the charity’s state license number. All charities must register annually in the state in which they solicit funds as follows:
- New York -- Office of the Attorney General, 1.212.416.8402
- New Jersey -- Office of Consumer Affairs at 1.800.242.5846
- Pennsylvania -- Department of State, Bureau of Charitable Organizations, at 1.717.783.1720
If you suspect that a fraud related to the Hurricane Sandy relief efforts has occurred, contact The National Center for Disaster Fraud (NCDF) at 1-866-720-5721. This hotline is staffed 24-hours a day, 7 days a week and they will refer your complaint to the Fraud Task Force in your local area.
The above schemes are not to be considered an exhaustive list of how fraudsters can prey upon innocent victims. The key is to have the ability to set aside emotions and focus on the preventive measures necessary to minimize your chances of becoming their next victim.