How to Avoid Disaster-Related Fraud
Following a major disaster, we often hear stories of how different communities come together to help others that were affected. Stories of generosity, stories of hope!
But during these events, it isn’t always kindness that is shown and there are those that go out of their way to revictimize the survivors with fraud and scams. They want to make money off of others while they are at their lowest.
There are many ways in which this fraud and these scams are carried out but the first thing that usually happens is charity fraud. Following a disaster, false websites get set up to collect donations that never get sent for relief.
An example of this charity fraud happened while Katrina was still hitting Louisiana. A man from Florida set up a website “AirKatrina.com” where he claimed that he was a private pilot who was performing rescues and needed the money for fuel. He used wording such as “I will hear these screams for the rest of my life.” He was actually not even anywhere near Louisiana, yet he still managed to raise $40,000 in just two days.
Another common scam during major events is the use of robo-calls to tell victims that their flood insurance premiums were past due and they had to send money immediately or their policies would be canceled.
The list is endless when it comes to disaster-related fraud and with each new event, scammers are coming up with new ways of getting any money they can.
Contractors come forward to help with the clean up efforts but some will just take the money and disappear. Some will have FEMA benefits signed over to them.
The largest amount of fraud happens when people and businesses make false claims for relief payments for damages. Many of these who were not even affected by the disaster will create false invoices with false employee manifests, W-9 [tax forms].
Identity theft is also big. Criminals know that they can steal the identities of real victims and file for their relief funds before the victims can do it themselves.
Types of Disaster-Related Fraud
Although there are a wide range of different scams and disaster-related fraud, they can usually be divided into five different categories which are:
- Charitable solicitations – this type of fraud involves people or websites posing as legitimate organizations that claim to be raising funds for disaster victims. People will often search for ways in which they can help the victims and donate funds after disasters. Many are often deceived by fake websites.
- Contractor and vendor fraud – this occurs when people pose as contractors or repairmen but have no intention of actually doing the job. They will take the money and run.
- Price gouging – supplies are usually limited following a disaster and some people and businesses will increase the price of goods that are in demand or in limited supply in the disaster zone.
- Property insurance fraud – this type of fraud is what individuals and businesses do against insurance companies in which they may inflate losses, fake repairs, claim lost services, and in some cases, even deliberately cause damage to property to collect on insurance policies in the wake of a disaster.
- Forgery – this includes reimbursement checks being stolen from mailboxes, submission of false building permits and receipts for claims, forged insurance and federal emergency assistance checks, and fraudulent damage reports.
Tips for Avoiding Disaster-Related Fraud
You must be cautious before giving any of your money to people or businesses that claim to be collecting donations for victims of a disaster. Always consider the following tips:
- Be aware of crowdfunding websites. These kinds of websites do very little vetting of individuals who decide to post for assistance after a disaster, and it is often difficult for donors to verify the trustworthiness of crowdfunding requests for support
- Never respond to any unsolicited emails. This includes making sure not to click any links within those messages, because they may contain computer viruses that steal your information
- Always be skeptical of anybody that claims to be members of a charitable organization or officials asking for donations
- Beware of organizations with copy-cat names similar to, but not exactly the same as those of reputable charities
- Instead of following a link to a website, verify the legitimacy of nonprofit organizations by utilizing various internet-based resources that may assist in confirming the group’s existence and its nonprofit status
- Never open attachments sent via email that claim to show pictures of the disaster areas as these too may contain viruses
- If you wish to contribute and know that your money will be used for the intended purposes, always make contributions directly to known organizations instead of relying on others to make the donation on your behalf
- Never feel pressured into making contributions. Legitimate charities never use such tactics
- Be aware of whom you are dealing with when providing your personal and financial information. Providing such information may compromise your identity and make you vulnerable to identity theft
- When possible, don’t donate with cash, do it with your credit card or write a check directly to the charity instead of making it payable to an individual
- Always be aware of charities that you have never heard of before
The best way to avoid disaster-related fraud is to ask questions and ask lots of them. This will help you to determine if something is too good to be true. If they can’t or won’t answer your questions, these are huge red flags that they aren’t who they claim to be.
The Bottom Line of Disaster-Related Fraud
Always make sure that you know exactly who you are dealing with. Ask for identification before you even start considering giving a donation.
Some scammers will pose as government officials to get money from you but true officials will never ask you for money in exchange for information or the promise of a check.
The bottom line is – be aware that scams often follow the news, especially when there’s a natural disaster.