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How To Avoid Disaster Recovery Scams

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After extreme weather and natural disasters like hurricanes, wildfires, and tornadoes, you might need to quickly hire someone to help get things back to normal. But don’t hire the first person who says they’ll help. Unlicensed contractors and scammers often show up after natural disasters and promise quick repairs, clean-up, and debris removal. But if you hire them, they take your money and then don’t do the work, promise you a discount but charge outrageous prices, or lack the skills to do the job.

Before Anyone Starts Work

  • Contact your insurance company. Ask about the next steps in assessing any damage to your home or business. If a contractor tells you work is covered by your insurance, call your agent to make sure.
  • Find out if tree and debris removal contractors need to be licensed in your area. If they do, make sure licenses and insurance policies for the contractor you’re considering are current. Check for contact information on their trucks. Then check with your state or local consumer protection office for complaints.
  • Research a contractor’s reputation and work online. Use online ratings sites you trust to see what others are saying. Do people seem to have similar experiences, good or bad? Also, check out a contractor’s reputation by searching online for the company’s name with words like “scam,” “review,” or “complaint.”
  • Check with the local home builders’ association and consumer protection officials. Find out if there are complaints against contractors you’re considering.
  • Get more than one estimate. The written estimate should include a description of the work to be done, materials, completion date, the price, and the contractor’s contact information. Don’t automatically choose the lowest bidder. Ask for an explanation if there’s a big difference in price.
  • Look for signs of a scam. Don’t do business with contractors who encourage you to spend a lot of money on temporary repairs, offer “special deals” in exchange for your credit card number, or promise you a loan in exchange for a fee in advance.
  • Read the contract carefully. Contract requirements vary by state. Even if your state doesn’t require a written agreement, ask for one. Before you sign a contract, make sure it includes
    • the contractor’s name, address, phone, and license number (if required)
    • an estimated start and completion date
    • any promises made during conversations or calls
    • a written statement of your right to cancel the contract within three business days if you signed it in your home or at a location other than the seller’s permanent place of business
    • also make sure all blank spaces are filled in

Paying for Clean-up and Repairs

  • Check or credit card: Negotiate a reasonable down payment by check or credit card. Never pay in cash, and never pay the full cost of repairs upfront. Some states actually limit the amount of money a contractor can ask for as a down payment. Contact your state or local consumer protectionstate or local consumer agency to find out the law in your area. And never make the final payment until the work is done and you’re satisfied with it.
  • Insurance: Never sign your insurance check or claim over to a contractor. Instead, arrange with your bank or credit union for a Certificate of Completion. That way, the bank will pay the contractor for each stage of the job after you have given your approval.
  • FEMA disaster relief: FEMA operates a Disaster Housing Program to help people who have been forced out of their homes by disasters. This includes Disaster Home Repair Assistance, which gives grants to people for minor but necessary disaster-related repairs. Call the FEMA Disaster Helpline at 1-800-621-FEMA.
  • SBA loans: The U.S. Small Business Administration makes low-interest loans of up to $200,000 to homeowners to repair or replace damaged or destroyed real estate.
  • Personal loans: If you decide to get a loan to pay for the work, be cautious about using your home as security. If you don’t repay the loan as agreed, you could lose your home. Consider asking an attorney to review the loan documents.

How To Handle Problems

  • Report fraud, waste, or abuse involving FEMA disaster assistance programs. Contact the Department of Homeland Security’s Inspector General’s Office at 1-800-323-8603.
  • Report scams. If you think you see a scam, report it to the Federal Trade Commission at ReportFraud.ftc.gov. Your report could help the FTC stop the scammers and help someone else avoid that scam.

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