Beware of fraud after disasters like Hurricane Helene

Almost one year ago, Hurricane Helene wrought massive destruction on Tennessee and several other states. When attempting to recover from a flood, hurricane, fire, tornado or some other natural or human-caused disaster, take care to ensure you don’t become victimized a second time — and know where you can go for self-protection information.

Every calamity is followed by people using fraud to profit from the misfortunes and tragedies of others. Criminals walk among us, so it’s necessary to be on our guard. Nearly 40% of Americans have encountered disaster fraud activities, according to a survey by the Harris Poll for the American Institute of Certified Public Accountants. The AICPA’s news release noted that fewer than 50% of Americans have insurance that covers them for fraud, while 64% of businesses have disaster-related fraud coverage. That leaves a lot of people uncovered.

The survey explained, by percentage, the types of fraud people commonly encounter after a disaster:

• Identity theft: 14%

• Government assistance fraud: 11%

• Loan scams: 11%

• Vendor fraud: 10%

• Utility scams: 10%

• Charity fraud: 10%

• Insurance fraud: 10%

• Contractor fraud: 8%

Let’s review three types of fraud mentioned in the survey:

1. In a disaster’s aftermath, you want to get your business reopened or your house repaired. Fast. Someone knocks on your door to say they’re a contractor who’s come to the area to help people get back on their feet. They have a pickup truck with tools in it, and offer a verbal explanation of the kind of work they do and how good they are at doing it. A good approach is to not make a decision you wouldn’t make if the disaster hadn’t occurred. For example, if an alleged independent contractor came to your home or business similarly soliciting work, you wouldn’t tell them to get started: You’d want to see a business license (that you could check with the appropriate state agency), references and notable previous jobs, insurance coverage and any record of trouble with the Better Business Bureau or other ratings organizations. At the very least, you’d conduct an internet search. But if you decide to go forward, never pay in advance, and get in writing all scope of work and costs. However, if someone is planning to defraud you, the guarantees are likely as questionable as their promises.

2. Disasters are inevitably followed by individuals or organizations who say they will — for a fee — help you obtain government grants, loans or other post-disaster benefits. You don’t need them. You’ll pay them for what you can do for free. The Federal Emergency Management Agency advises on this subject on its website page on disaster fraud:

   • “Don’t trust someone who asks for money. DHS, FEMA, SBA, and other federal agencies will never charge applicants for disaster assistance or help in filling out applications.

   • “Don’t believe anyone who promises a disaster grant and asks for large cash deposits or advance payments in full.”

3. Charity fraud is rampant following disasters, with fake charities popping up like weeds in a garden to take advantage of people who want to help those affected by a disaster. You can rely more confidently on reputable, well-known charities with a long history of service. Research charities on such sites as CharityWatch and Charity Navigator.

To help avoid disaster-related fraud, consult with an accountant experienced in disaster recovery and forensic accounting. In advance of a calamity, an accountant can help you plan financially and operationally: if disaster strikes, a plan enables you to act instead of reacting. After a disaster, accountants can act as guides to advise on the pitfalls and potential of disaster recovery efforts, steering you away from financial victimization.

This article originally appeared on KnoxNews.