Monday, August 5, 2013

Beware These Disaster-Related Scams

Superstorm Sandy is the most recent large-scale natural disaster to hit the United States. Sandy caused an estimated $25 billion in damages and left 7.5 million customers without power in 15 states along the east coast. A disaster of this magnitude means two things: people need help and con artists will try to take advantage of victims' desperation. 

Here are some of the most common natural disaster scams and how to avoid being a victim.

Identity Theft
The Federal Emergency Management Agency reports that people pretending to be FEMA or other government officials are calling or going door-to-door asking for personal information. FEMA advises citizens not to give out their social security number, banking information or other forms of identification. Crooks use this type of data to perpetrate all manner of identity theft crimes. Legitimate businesses and government agencies will go to great lengths to protect your identity. FEMA and the Small Business Administration (SBA) will not ask for personal information until the victim first contacts them. Do not respond to unsolicited phone calls or visits. Make the contact yourself. 

Fake Victims
Social media has revolutionized how people communicate. Unfortunately, it has also revolutionized how con artists communicate with potential prey. Stories of loss tug at the heartstrings of the caring public. Pleas for help have been posted, tweeted, reposted and retweeted so much that it is impossible to separate the cons from the legitimate requests. Some of these cries for help are fabricated. If you want to contribute, stick with the most effective charities and charities you know. If you want to provide more direct aid, work with family or friends who know of individuals in need. 

Speaking of Charities
Read carefully the name of the charity asking for donations. Unscrupulous organizations may adopt a name closely related to a well-known charity in an attempt to trick donors. Perform an online search using the keyword phrase: "exempt organizations select check" to find qualified charities with tax-deductible status from the IRS. The website is the nation's largest and most-utilized evaluator of charities. Charity Navigator, a free service, provides a complete evaluation of everything from program and administrative expenses to fundraising efficiency. 

Crooked Contractors
When disaster strikes, contractors flood the area to cash in on the rebuilding effort. Many are ethical and registered legitimate businesses. Some are not. Before working with a contractor, ask for a copy of the contractor's liability insurance and verify that the policy is valid. Ask for and check out references if possible. Call or go online to check with the Better Business Bureau (BBB). Online review services, such as Angie's List, can also help. A detailed list of all work to be performed should appear on the contract and full payment should not be required until the work is completed to your satisfaction. Do not fall for: "I don't have the money to buy the supplies unless you pay all of it up front." Legitimate businesses front the cost of supplies and labor.

Insurance Cons
Beware of "specialists" who say they can increase the amount of FEMA aid you receive or bump up your insurance settlement. In return, they will probably ask you to sign a contract that gives them a certain percentage of the extra funds. Not only is this a potential for identity theft, but a contract like this may force you to give them a percentage of money that would have been yours anyway. Deal directly with FEMA or your insurance company if you feel the original aid or settlement is not satisfactory. 

Report It
If you believe that somebody contacted you with illegal intentions, do not stay silent. Contact local law enforcement officials, the FBI or the National Center for Disaster Fraud. You may have seen through the con artist, but your neighbor may fall victim. 

The Bottom Line
It is not just this storm. Any time a disaster of this magnitude happens con artists and thieves will try to take advantage of people when they are most in need of human kindness. Knowing what to look for will help you to separate the Good Samaritan from the wolf in sheep's clothing.

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