Keeping an Eye on Fraud in 2018 and Beyond

When it comes to fraud, investigators and law enforcement professionals know fraudulent behavior comes in many forms. In recognition of International Fraud Awareness Week, Hg is launching a three-part series on fraudulent activities that are relevant today and into the foreseeable future: Disaster Fraud, Consumer Retail Fraud, and Hedge Funds Fraud.

This week, as folks in the Carolinas and Florida still recover and rebuild after Hurricanes Florence and Michael wracked up to $50 billion and $6 billion in damages and losses, respectively, we discuss disaster fraud.

Disaster Fraud

Thousands of people will continue to recover from Hurricanes Florence and Michael and perhaps years to come as they seek to rebuild their homes, their businesses—and their lives. Those affected by the storm have been devastated from damage and loss. When people are most vulnerable, criminals of all types take advantage. Having experienced Hurricane Sandy first hand in 2013, I witnessed disaster related fraud scenarios pre-disaster, during the storm, and post-disaster.

While people can protect themselves from theft and looting by being aware and taking precautions, they must also protect themselves from the not so obvious fraud and financial criminal activity that follows a disaster. We only have to look to the victims of Hurricanes Katrina and Sandy to see that recovery takes a long time; and those who take advantage of these victims during their rebuilding suffer great penalties if they get caught. After Katrina, there were 1,200 federal prosecutions based on fraud, and authorities are warning residents in the Carolinas and Florida to be on the lookout for potential scammers.

Fraudsters will attempt to steal money under the guise of a false charity; attempt to sell a hurricane ravaged car; gain FEMA money; and steal food stamps, clothes, food, and blankets that are donated by concerned citizens. Fraud activity also includes posing as contractors and insurance adjusters. In times of disaster, both sides of the coin are preyed upon: Those needing aid and those looking to aid relief. The government takes care to prevent fraud on their side. Citizens and victims need to be vigilant, too.

Types of Disaster-Related Fraud and How to Combat Them

INSURANCE FRAUD

Call your insurer first. Then FEMA. Those with damage to their property need to contact their insurance carrier to report all damage that has occurred. Document damage by taking pictures. If still available, locate old receipts to validate lost or damaged property. Do not remove anything until your insurance provider has inspected the damage.

Only accept “reactive” insurance advice (i.e., your insurer or FEMA responds because you called them.) Be wary of “roaming freelance adjusters.” They are looking to become your agent to collect a percentage of damages. Get and verify documentation from all agents. Don’t ever “pay money” to “get money.”

CONSTRUCTION FRAUD

Unregistered, unskilled, and uninsured repairmen want your dollars. Out-of-work laborers see your loss as an opportunity to make a few bucks. Be wary of rogue contractors who offer repairs and cleanup services. Case in point: A few days after residents were let back on Bogue Banks in Atlantic Beach, N.C. in the aftermath of Florence, a couple 20-somethings drove around the battered communities in a truck with a makeshift magnetic “business” sign attached to the door. They offered to enter properties, assess damage, and provide repair services without being insured or licensed. Always ask for proof of insurance and take notes. Verify occupational licenses using the free Web site www.brbpublications.com/freeresources/pubrecsitesOccStates.aspx.

UTILITY REFUNDS

Recover funds for lost power and food. Be proactive. If you lost power and TV, contact your provider when you get back online and ask for a refund or compensation for the days you were without. Where’s the danger? Those in heavily damaged areas may get a phone call from your “utility” looking to “credit your bank or card.” Don’t buy it. Call your utilities and ask for credits with a legitimate agent. Lost food in the outage? It might be covered under your homeowner’s policy.

CHARITIES/FUNDRAISERS

Be wary of online charities, phone solicitations, impromptu fundraisers, and social network campaigns. Social networks and e-mail will be used heavily to solicit donations. Vet and verify the source of the requester before responding or donating. You can check with your Secretary of State to verify if the charity is legitimate. You can also check with www.guidestar.org to ensure they are a legitimate non-profit.

Beware of organizations with copycat names that are similar to but not exactly the same as those of reputable charities (i.e., Red Star vs. Red Cross). Be especially vigilant of groups calling your home for solicitations. Online, most legitimate charities Web sites end in .org rather than .com, .net, or .bus.

AVOIDING TOXIC PRODUCTS

When you get to the process of rebuilding, you get what you pay for. During the Katrina rebuild, contractors used drywall from China because of the cheap price and ready supply, only later to learn that it was toxic and needed to be replaced.

REPORT DISASTER FRAUD

In the wake of Hurricane Katrina, the Criminal Division of the U.S. Department of Justice created the National Center for Disaster Fraud (NCDF). Located in Baton Rouge, LA, NCDF’s purpose is to receive and screen reports of possible fraud relating to disasters of all types. Reports go to the field offices of appropriate federal law enforcement agencies. Those who wish to report disaster-related fraud or report fraudulent claims should contact the NCDF via at 877-623-3423 or e-mail disaster@leo.gov.

Next up, in the spirit of the upcoming shopping craze during the holidays, we will discuss how consumers can protect themselves from retail fraud.

Cynthia Hetherington, MLS, MSM, CFE, CII is the founder and president of Hetherington Group, a consulting, publishing, and training firm that leads in due diligence, corporate intelligence, and cyber investigations by keeping pace with the latest security threats and assessments. She has authored three books on how to conduct investigations, is the publisher of the newsletter, Data2know: Internet and Online Intelligence, and annually trains thousands of investigators, security professionals, attorneys, accountants, auditors, military intelligence professionals, and federal, state, and local agencies on best practices in the public and private sectors.

2018-12-11T16:00:30+00:00 November 14, 2018|Tags: , , , , , , , , |