Tips for Avoiding Disaster-Related Fraud
October 19, 2018
Disasters tend to bring out the best in people. But unfortunately, disasters also can bring out some of the worst in people too. Fly-by-night contractors and scam artists follow in the wake of disasters to prey on vulnerable victims.
The following are some of the typical types of fraud that can take place after a disaster and what you can do to avoid them.
Unfortunately, occurrences of price gouging following a disaster are well documented. Most businesses are community minded and deal with their neighbors fairly. Some, however, are not. To report price gouging situations, contact the NJ Division of Consumer Affairs at 800-242-5846 (in NJ) or 973-504-6200.
Advanced Fee Loan Scam
If you need to get a loan quickly, don't be tempted by promises of "guaranteed" loans for upfront fees. Telephone solicitors may request a loan initiation fee ranging from $100 to several thousand dollars. Fraud prevention experts warn that you may never get a loan or see your money again. To learn more, visit njconsumeraffairs.gov/Fraud/Pages/default.aspx.
Door-to-Door Solicitation and Charity Fraud
In the wake of a disaster, you may find a series of solicitors at your door seeking donations to help with recovery efforts. In most municipalities, anyone soliciting door-to-door must be registered with the local police department.
For peace of mind, donate directly to the charity of your choice. Frequently, the door-to-door solicitors are only in town long enough to take advantage of the situation.
Before you donate, remember:
- Do not give cash
- Do not give out your credit card number
- Do not be pressured into giving
- Do not give to a charity because you were sent a gift or were offered a "free" prize
- Do not be fooled by names that sound similar to legitimate charities
- Do not do business over the telephone — ask for information in the mail
- Beware of organizations offering to send a courier to pick up your donation
- Write a check payable only to the charity
- Beware of appeals that are long on emotion and short on fact
When people solicit a charitable donation, ask questions:
- What is your full name?
- What is the phone number and address that you are calling from?
- What is the full name of the charity you represent?
- What is the address of the headquarters?
- What is the telephone number?
- How long has the charity been in operation?
- What are its goals and purposes?
- How will my donation be used?
- Is my contribution tax deductible?
- How much of my donation will go directly to the charity?
Helpful Telephone Numbers
- New Jersey Division of Criminal Justice
Department of Insurance Fraud
- Department of Homeland Security
- FEMA National Registration Center
- Small Business Administration (SBA) Fraud Hotline
- SBA Answer Desk
This Disaster Recovery Guide has been compiled from a variety of sources. It is intended as a source book and guide only. It is not a substitute for professional judgment or for research into authoritative professional literature. Although this manual is not authoritative, it will help guide you to authoritative sources.
Material contained within this guide should be augmented by, and used in accordance with, a certified public accountant's professional judgment. Your CPA can properly apply the tax laws and regulations to the facts and circumstances of your particular situation. For help with locating a CPA, visit findacpa.org.
The New Jersey Society of Certified Public Accountants is not responsible for any claims arising as a result of this information or its usage.
This guide was updated in October 2018. Future users of this material are cautioned that some portions, particularly tax-related information, may become outdated.