WASHINGTON (9/4/12)--Several federal and state agencies and consumer groups have issued warnings to consumers to beware of scams that typically occur after a natural disaster--both in the affected areas and across the country. Credit unions should be alert to two of the most popular: charity donation scams and home improvement loan scams.
The Federal Trade Commission, the Better Business Bureau, the Consumer Financial Protection Board and several state agencies all have issued alerts to consumers. Credit unions, especially in states that have flooding from Hurricane/Tropical Storm Isaac, should also be alert to members withdrawing or transferring funds to possible fraudulent entities posing as charities and home repair specialists.
Because credit union employees and members tend to be "people helping people," they could be at risk for encountering scam artists posing as charities collecting funds for victims in a disaster area. The Better Business Bureau (BBB) in Chicago has warned consumers to fully check out anyone soliciting donations (The Sacramento Bee
Aug. 31). The bureau particularly warned consumers to avoid donation pitches that come through e-mail and to be wary of claims that 100% of the donation will go to victims. All charities have expenses, said BBB.
The FTC has advised people to: donate to charities they know and trust; ask if a caller is a paid fundraiser, who they work form and what percentage of the donation goes to the charity and the fundraiser; avoid giving out personal or financial information such as credit card and credit union account numbers unless they know the charity is reputable; never send cash; and check out the charity before donating to it.
Home and business repair contractors may be fraudulent if they:
- Are unable or unwilling to provide proof of licensing, bonding and insurance;
- Insist on full payment or a large down payment before beginning work or pressure the consumer into signing a contract.
- Offer a great deal because of materials "left over" from a previous job or offer a discount for finding other customers.
Other common scams, according to information from the Office of the Attorney General in Bismarck, N.D., include:
Form completion services. Advise members to avoid people who charge a fee to help them complete a disaster assistance form for agencies such as the Small Business Administration (SBA) or the Federal Emergency Assistance Agency (FEMA). These services are provided free by FEMA and the American Red Cross.
Phony inspectors. Advise members to verify the credentials before letting anyone in the home and to ask for a telephone number to confirm the inspector is working for an authorized agency.
Government grant offers. Members should be told to be aware of entities that offer "free grant money" for flood repair or disaster relief. A true grant is free and does not require upfront fees or repayment. Advise members to check with a regional or state economic development office to learn about grant programs they may be eligible for. Local social service agencies can also provide information or assistance.
Advance fee loans. It is illegal to charge an up-front fee for a loan. Tell members to ignore any company that "guarantees" they will receive a loan. Scamsters will charge a processing fee, then promise to find a lender. Members should check to see if the "lender" is registered with the state department of financial institutions in order to lend funds in the state.
Water testing and purifiers. Warn members to avoid offers for "free" home water testing or be skeptical if an in-home "test" indicates they have unsafe water. They can monitor local news media for instructions from health authorities regarding water safety and purification or they can contact their local public health authority directly.