San Diego, California - The Federal Bureau of Investigation reminds the public to use caution when making donations in the aftermath of the San Diego area wildfires. Unfortunately, criminals can exploit these tragedies for their own gain by sending fraudulent e-mails and creating phony websites designed to solicit contributions. Additionally, home repair and cleanup frauds are especially common after natural disasters.
Disaster fraud is defined as an activity with the purpose to defraud individuals or the government after a natural or man-made catastrophe. Some common examples include unscrupulous operators who persuade disaster fraud victims to claim more damages than actually occurred, contractors who collect money to repair damaged property but never complete the work, and homeowners who increase damage estimates for personal gain.
There are five main forms of disaster fraud. They include charitable solicitations, price gouging, contractor and vendor fraud, property insurance fraud, and forgery.
Fraudulent charitable solicitations involve people posing as both legitimate (e.g. Red Cross) and non-existent organization workers collecting money to assist with disaster relief.
Price gouging involves businesses increasing the prices of goods that are in demand or limited in order to make a larger profit.
Contractor and vendor fraud is the product of an individual posing as a contractor or repairman with no intention of actually repairing damages.
Some scams even require an advance fee before providing the fraudulent labor (advance fee schemes). Examples of this type of fraud include inflating losses, faking repairs, and claiming lost services.
Finally, forgery comes into play when dealing with disaster fraud. Commonly forged documents include insurance checks and building permits and receipts for claims submitted to insurance companies.
The FBI continues to remind the public to perform due diligence before giving contributions to anyone soliciting donations or individuals offering to provide assistance to victims of the wildfires. Solicitations can originate from e-mails, websites, door-to-door collections, flyers, mailings, telephone calls, and other similar methods.
Charitable Donation Fraud
Before making a donation of any kind, consumers should adhere to certain guidelines, including:
- Do not respond to any unsolicited (spam) incoming e-mails, including clicking links contained within those messages because they may contain computer viruses.
- Be skeptical of individuals representing themselves as members of charitable organizations or officials asking for donations via e-mail or social networking sites.
- Beware of organizations with copy-cat names similar to, but not exactly the same as those of reputable charities.
- Rather than follow a purported 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.
- Be cautious of e-mails that claim to show pictures of the disaster areas in attached files because the files may contain viruses. Only open attachments from known senders.
- To ensure contributions are received and used for intended purposes, make contributions directly to known organizations rather than relying on others to make the donation on your behalf.
- Do not be pressured into making contributions; reputable charities do not use such tactics.
- Be wary of out of state organizations, especially if their only address is a post office box.
- 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.
- Avoid cash donations if possible. Pay by credit card or write a check directly to the charity. Do not make checks payable to individuals.
- Legitimate charities do not normally solicit donations via money transfer services. Most legitimate charities websites end in .org rather than .com.
- Be wary of individuals pretending to be representatives from the Federal Emergency Management Agency collecting a “processing fee” for an emergency loan or other assistance. If you receive a phone call or visit from someone claiming to be a representative of a particular agency, always call the agency to confirm the representative is legitimate.
Many people can lose important documents after a natural disaster. These items, which often contain personal information such as a Social Security and credit card and bank account numbers, can be used by identity thieves to make purchases and open new accounts in your name. Be sure to do the following:
- Contact your creditors immediately to report lost credit cards. Contact your bank if you have lost checks or bank card.
- Use a paper shredder to dispose of any papers or documents with personal information when you are cleaning up after a disaster so identity thieves cannot get your personal information.
- Get a copy of your credit report a few weeks after the disaster to be sure no one has illegally used your personal information. You can obtain a free credit report once a year from each of the three major credit reporting agencies: Equifax, Experian, and Trans Union.
Home Repair Fraud
Unfortunately, disaster fraud can be found following nearly every devastating event. One common type of natural disaster fraud is the home repair scheme. Following a natural disaster, victims of the disaster are often immediately in search of a contractor or repairman to help rebuild or restore their homes. Legitimately licensed home repair companies are usually quickly scheduled for jobs after a disaster strikes. Some homeowners in need of immediate repairs neglect normal precautions and hire a dubious relief source. The Federal Trade Commission (FTC) and the Federal Emergency Management Agency (FEMA) offer the following tips when hiring relief to do repairs after a disaster.
- Deal only with licensed and insured contractors.
- Get recommendations and check with the Better Business Bureau (BBB) and the Home Builders Association to see if complaints exist against a potential contractor.
- Review the contract thoroughly. Get written estimates. Ask someone (friend, family, and attorney) to review the contract before signing. Get a second opinion.
- Avoid dealing with contractors that request money up front before a job is completed.
- Be skeptical of a contractor that has you spend a lot of money for temporary repairs.
- Never pay a home contractor or any other vendor in cash. Do not sign over your insurance settlement check. Only pay by credit card or personal check. Be sure not to pay in full up front.
- Don’t be pressured. Don’t fall for hiring someone who is offering a “one-day-only” special or a discount for hiring him on the spot. Disreputable contractors often solicit door to door offering rebuilding of cleaning services after a natural disaster.
The National Center for Disaster Fraud was created by the Department of Justice to investigate, prosecute, and deter fraud in the wake of Hurricane Katrina, when billions of dollars in federal disaster relief poured into the Gulf Coast region. Now, its mission has expanded to include suspected fraud from any natural or man-made disaster. More than 20 federal agencies, including the FBI, participate in the NCDF, which allows the center to act as a centralized clearinghouse of information related to disaster relief fraud.
The public can also report suspicious e-mail solicitations or fraudulent websites to the FBI’s Internet Crime Complaint Center, www.ic3.gov or by calling the FBI at telephone number (858) 320-1800.