If your business has recently experienced a disaster, the last thing you want to have to think about is whether or not someone is going to use that to take advantage of you. The time immediately after a disaster is a very vulnerable period, and it can be difficult to have the mental energy to figure out what's worthwhile, and what might be a potential scam. Unfortunately, there are plenty of unscrupulous people who want to do just that. With more than twenty years of investigative experience in the insurance field, Roman suggests you take the following proactive steps to avoid potential disaster fraud.
Common Disaster Fraud Scams
The simplest way that contractors may try to defraud their customers is by getting them to overpay. This can be accomplished by price gouging, getting clients to sign an agreement with blank spaces in it, demanding to be paid up front, and insisting on cash. Some may also claim to be endorsed by government authorities, or even pretend to represent them. "Phishing" for credit card numbers, social security numbers, bank accounts, and other important information by pretending to be a business or government representative also frequently occurs in the wake of a disaster.
Always Ask For ID
Actual federal and state workers always carry identification, and they never ask for money. If someone is pretending to act on behalf of the federal or state government, make sure you ask to see some form of ID. If they refuse, or don't show you a proper ID badge, they are likely impersonating an actual government employee.
Get Multiple Estimates
After a disaster, time is of the essence. Not only are you losing business the longer you're non-operational, some disaster damage will worsen over time if it isn't dealt with promptly. Fraudsters know that and will attempt to pressure you into an immediate decision. Don't rush into any decisions — get estimates from multiple sources and consider all of your options. It's also not at all uncommon for some contractors to price gouge after a disaster, when labor and materials are in demand. If you think you're being price gouged, notify the Office of the Attorney General for your state.
Get Everything in Writing
In addition to getting multiple estimates from several different sources, make sure everything is in writing. It's said that a verbal contract isn't worth the paper it's written on, and it's true — especially during a sensitive time like disaster recovery. Get any estimates, guarantees, property damage assessments, or other agreements in writing.
Be Careful How You Pay
While cash might be a convenient and fast way to pay, it leaves you with little recourse if things go sour. Use checks or credit cards, so there's a paper trail in case you get scammed. If you hand someone cash, you don't have many avenues if they defraud you. If your bank can track the transaction, they can help you during fraud investigations. It's also important not to pay upfront. If you do, your work might never be completed. Shady companies very often ask to be paid upfront, only to take the money and run.
Don't Pay to File Disaster Relief Applications
There is no charge for applying or obtaining disaster relief assistance from your state, the U.S. Small Business Administration, or FEMA. FEMA inspections and property damage assessments don't cost anything. Don't fall for scams attempting to charge you money to file.
Don't Sign Anything That Isn't Completely Filled Out
Unscrupulous contractors might try to get you to sign an agreement that isn't complete — that is, one with blank spaces where the contractor can fill in things at will. This is a common scam tactic that allows them to later claim that you agreed to things that you never wanted, and, because they have your signature, it's difficult to subject to fraud investigations. Make sure any agreement you sign is completely filled out, with no blanks.
Only use bonded, insured contractors with references you trust. Get their certificate of insurance right from their insurance company, not from the contractor themselves. Check all of their credentials, and thoroughly research any customer complaints against the contractor through review websites, the Better Business Bureau, and your state's Office of the Attorney General.
Watch Out For "FEMA Endorsements"
Some contractors may claim to be endorsed by FEMA. This is a lie. FEMA doesn't have anything to do with certifying, endorsing, or otherwise promoting contractors. If they're willing to be dishonest about that, they may try to defraud you in other ways, too.
It's just as easy to run a scam in person as it is over the phone, through the mail, or even by text or email. Never give your financial information to anyone you don't know, and don't submit anything over a website without a security certificate. Actual disaster relief workers will never need your social security number, bank account information, or other sensitive information.
Don't Be Tempted.
You may be approached about participating in a fraud scheme yourself. While insurance fraud might seem tempting, it's a felony that could land you in prison. Even if you don't, it's likely that your insurer will void your policy and refuse to insure you in the future. Don't fall for it — insurance fraud isn't worth the risk. After you go through a disaster, your guard is down. You want help, and it's awful to think that the very people who claim to want to help you are just there to scam you instead.
Don't allow your business to fall victim to disaster fraud. Follow these tips, and you'll be able to get yourself back up and running in no time. Fraud costs the insurance industry upwards of $150 billion each year, and Roman knows how to prevent it, detect it, and help prosecute it.
If your business has fallen victim to disaster fraud - or any other type of insurance fraud – let the experts at Roman help you get peace of mind. To request a consultation, or to submit a case, contact Roman by calling us at 800.422.9032 or by sending us an email.