What Scams Should I Be Aware of Resulting from a Disaster such as Hurricane Sandy?

Now that this hurricane is somewhat of a memory, there is much assistance needed for the victims.  There are generous and giving people that want to help by donating money to those in need. On the other hand, there are crooks and fraudsters who want to take advantage of the victims. The Federal Trade Commission (FTC) has advice on the scams that follow disasters.  There are two main categories charitable contributions and fraudulent home repairs.

Charitable donations

According to the Federal Trade Commission, if you are asked to donate to those impacted by storm Sandy or any other natural disaster, here are some tips:

Donate to charities you know and trust. Don’t give to charities that are new, they may have been started just t as a scam for this disaster.  It is best to donate through a trusted source such as a church or bank.

If you are contacted by phone, ask whether they are a paid fundraiser; and if they are, ask the company for which they work, and what percentage of your donation goes to the charity versus the fundraising. If you don’t get a clear answer or don’t like the answer, consider donating to a different organization.  There are many other legitimate places to donate funds. Personally, I would not donate based on an unsolicited call.

Do not give out personal or financial information, including your credit card or bank account number, unless you know the charity is reputable. I would add that you shouldn’t do so unless you made the initial contact.

Never send cash: you can’t be sure the organization will receive your donation, and you won’t have a record for tax purposes.

Check out a charity before you donate. Contact the Better Business Bureau’s Wise Giving Alliance at www.give.org.

Fraudulent home repairs

Fraudsters target disaster-affected areas, hoping to cash in on property owners’ insurance settlements and financial relief from the federal government. According to the Federal Trade Commission, home and business owners who need to hire a contractor should:

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Ask for copies of the contractor’s general liability and worker’s compensation insurance.

Be suspicious of contractors that go door-to-door offering to do the work.

Read the contract before you sign.  If you are pressured and not given enough time to read it, don’t sign. Make sure you aren’t signing for a loan to finance the repairs.

Do not take their advice of whom to use for financing.

Check the contractor’s identification and references.

Avoid paying more than the minimum in advance.

Deal with reputable people in your community.

Call local law enforcement and the Better Business Bureau, if you suspect a con.

In summary, it is best to initiate your own donation and not through someone who has contacted you.  In addition, if you have property damage, you should select the contractors. It is best to conduct research via the internet and get references from the contractor.  Make sure you call the references. Unfortunately, there are people that will take advantage of other people – even in the wake of a disaster.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.