As the South endures the effects of hurricane Florence (now a tropical storm), warnings already are being issued about another storm that's expected to follow, this one entirely man-made: Consumer fraud.Even as Florence was approaching the mainland, alerts sent out about post-storm scams, including this warning from the Better Business Bureau.
There are at least three types of disaster-related fraud you should know about, even if you don't live in an area directly affected by the storm: Charity and home contractor scams and the sale of flood and other storm-damaged cars to unsuspecting motorists.
Here's how these types of fraud work and what you can do to avoid them.
Charity scams
During my more than 30 years as a consumer and finance journalist, I've seen many examples of scammers trying to take advantage of the generosity of people who want to help those affected by hurricanes and other disasters. The fraud could be perpetrated using a website for a bogus charity that's been set up overnight to address a particular calamity. Or it may come as an unsolicited email or text. More recently, there have been bogus fundraising campaigns on crowdfunding sites such as GoFundMe, which I addressed in my last post. Even if a solicitation is from a legitimate charity, the group may not be in a position to help in a given event, whether it's Florence or anything else.
How to avoid it. Don't let the threat of fraud discourage you from giving. People really need your help. But be careful. It's best to give to major disaster relief organizations, such as the Red Cross, that can provide immediate help, especially early on. Of course, you also should consider giving to groups that have committed to helping victims recover over the long term.
Typically, after a disaster, government agencies and legitimate organizations post lists of top-rated charities that are actually committed and able to help. A good place to check over the next few days is the charity watchdogs, the BBB Wise Giving Alliance, Charity Navigator and CharityWatch. Finally, beware of unsolicited donation requests that show up in your email or by text. Even if it appears to be from a charity you know, it could be a fake.
Contractor fraud
As the Better Business Bureau warns, so-called storm chasers often show up after a disaster offering to fix damage to homes and other structures. They're often scammers out to take advantage of people desperate for quick repairs at a time when there's a big demand on legitimate contractors. These roving scammers may say they can start work right away. They might even offer an unusually low-price, in some cases saying they have supplies left over from a previous job. They may steal your down payment or make shoddy repairs and then disappear. Conversely, some contractors, even licensed ones, may try to take advantage of people's desperation by quoting really high prices, in possible violation of state laws against price gouging.
How to avoid it. Use caution if a contractor shows up at your door soliciting work. If possible, ask friends and relatives for recommendations for contractors who are reliable and do good work. Check out any contractor you're considering. You can find reviews at the Better Business Bureau, Angie's List, HomeAdvisor and other websites. Also, try a web search with the contractor's name and such terms as "reviews" and "complaints."
Also check your state's contractor licensing or registration regulations, and make sure the contractor meets them. HomeAdvisor has a list of contractor licensing requirements by state. South Carolina requires contractors to be licensed if they perform more than $200 in renovations on a residential building and more than $5,000 on a commercial structure. In North Carolina, a license is required only for projects costing more than $30,000.
Hiring a licensed or registered contractor not only can reduce the chances of your being defrauded, it also can make you eligible for money in states that have special funds, such as North Carolina's Homeowners Recovery Fund, to reimburse victims of dishonest or incompetent licensed contractors.
Finally, comparison shop so you can determine a fair price for the repairs you need. Report any attempted price gouging to your state or local consumer protection agency.
Storm-damaged car sales
A third, long-term concern is the sale of storm-damaged vehicles to unsuspecting motorists. Televised storm footage as Florence makes its way through the South already is showing vehicles submerged in water. Eventually, some of those damaged cars and trucks likely will make their way into the marketplace. Some may even lack a so-called branded title. A brand is a state-mandated designation on the title document that's intended to warn to buyers of certain past events, such as if the vehicle had been flood damaged or declared salvage. And many car buyers, especially those purchasing from dealerships, never see the former title anyway. This is a serious problem because flood damage to a vehicles can be difficult to detect and impossible to repair.
Car history reports from Carfax, Experian and other providers may reveal flood or other types of storm damage. But you can't rely on them. I've seen many instances of clean history reports for vehicles that have flood and other serious damage, as I reveal in this Consumer Reports 2009 investigation.
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| Cream puff? This burned GMC Yukon on eBay has a clear title and at least three clean car history reports |
Just today, it took me less than five minutes to find a seriously damaged vehicle on eBay Motors for which the seller boasted of a clear title and clean Experian AutoCheck history report. The report actually was displayed in the ad. I found that the burned 2008 GMC Yukon (see photo) also has a clean history report from the federal National Motor Vehicle Title Information System and the National Insurance Crime Bureau's VINCheck. (I didn't want to spend the $40 to check the vehicle on Carfax). Damaged vehicles often command a higher prices if they have so-called unbranded titles and clean history reports because unscrupulous buyers can repair and resell them without disclosing the past damage.
How to avoid it. When you're buying a used car, nothing beats an inspection by a competent mechanic, preferably one with experience in auto body work. Expect to pay at least $100 for this service.
Checking car history reports also can be helpful for the accidents, flood damage and other problems they reveal. But never trust a clean history report. Expect the seller to provide a Carfax or AutoCheck report at no cost, and then verify it with either company to make sure it hasn't been altered. VINCheck reports are free. You can obtain free NMVTIS reports from Carsforsale.com (registration required).
And never buy a used vehicle without checking the title for a brand, such as "flood," "salvage" or anything else that indicates a problem that can affect the price you'd be willing to pay or your decision to buy at all. If the dealer doesn't have the title, perhaps because the previous owner's loan hasn't yet been re-paid, pick another vehicle.
If you're buying a used car from a dealer, ask the salesperson for the former owner's contact information. Then call the person and for ask details about the car's history. The dealer may balk or even claim that giving you the information violates federal law (it doesn't). In some states, including Massachusetts, dealers are required to identify the former owner if the name is available. You also may be able to find the previous owner's name on the title (except for former leased vehicles, which often are titled to the leasing company) or, if you're lucky, somewhere on a document in the glove compartment or trunk.
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