Federal Deposit
Insurance Corporation

Summer 2011

Audio (MP3 8.3 mb)

Beware of Disaster-Related Financial Scams

Among the sad realities of many natural disasters is that as victims struggle, criminals scheme to profit. “Con artists take advantage of people after catastrophic events by claiming to be from legitimate charitable or assistance organizations when, in fact, they are attempting to steal money or valuable personal information,” said Michael Benardo, manager of the FDIC’s Cyber Fraud and Financial Crimes Section.

He explained that they typically use fraudulent Web sites, phone calls, e-mails and text messages offering to “help” in the rescue effort. “These criminals make their scams seem convincing and then pocket either donations or ‘down payments’ on fake repair offers,” Benardo said. “In effect, they are further victimizing people who are already down.”

How can you avoid becoming a victim?

If you’re a disaster survivor, be careful before accepting unsolicited offers of repairs or other assistance. Deal only with licensed and insured home-repair contractors and get recommendations from people you know and trust. To check out a local business, including complaints against it, start by contacting your state Attorney General’s office or your state or local consumer affairs office (see Disaster Recovery and Your Money: A Basic To-Do List). In addition, “get prices and other key details in writing and take your time to read and understand anything you are asked to sign,” advised Luke W. Reynolds, Acting Associate Director of the FDIC’s Community Affairs Branch.

He also said to be on guard against imposters who contact you out of the blue claiming to be government employees or volunteers and who ask for personal financial information or money to apply for aid that you can request on your own for free.

If you’d like to help out, avoid “charities” or “businesses” that use high-pressure tactics to get you to act quickly, perhaps to send money or provide personal information on the spot. “Be cautious if someone says you already agreed to donate or pay money, and you don’t remember doing so,” added Benardo.

Don’t give cash. It’s best to use a credit card or a check because either one provides some consumer protections, such as being able to dispute a transaction with the credit card company or place a “stop payment” on a check.

Protect your personal and financial information. Don’t divulge your bank or credit card numbers or other personal information over the phone unless you initiated the conversation with the other party and you know that it’s reputable. Also take precautions when considering an online donation. Go directly to a charity’s Web site by independently confirming the Internet address. Don’t follow a link in an e-mail as it may be to a fake Web site.

Give to charities that you know or have researched. Check with state government offices that regulate charities (listed on the Web site of the National Association of State Charity Officials at www.nasconet.org/documents/u-s-charity-offices).

Report suspected frauds. Go to www.lookstoogoodtobetrue.com/complaint.aspx, a Web site co-sponsored by the FBI and the U.S. Postal Inspection Service, to file a complaint. You can also contact the FTC toll-free at 1-877-FTC-HELP (1-877-382-4357).