ACFE Insights Blog

The Hidden Storm: Understanding Fraud in the Wake of Natural Disasters

In the aftermath of events like Hurricane Idalia and the wildfires in Hawaii, it is crucial to be aware of the various types of fraud that can emerge. 

By Rihonna Scoggins September 2023 Duration: 2-minute read
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Natural disasters like hurricanes and wildfires are devastating events that leave communities grappling with loss and destruction. While the focus is often on immediate relief and recovery, there is another aspect that frequently goes under the radar: the surge in fraudulent activities that exploit the chaos and vulnerability of these situations. In the aftermath of events like Hurricane Idalia and the wildfires in Hawaii, it is crucial to be aware of the various types of fraud that can emerge. 

The Many Faces of Disaster-Related Fraud 

Fraud in the context of natural disasters can take on multiple forms, each with its own set of challenges for victims and authorities. Here are some of the most common types: 

Charity Fraud

In the wake of a disaster, the outpouring of generosity can be overwhelming. However, not all charitable organizations are what they seem. Fake charities often pop up to capitalize on the goodwill of people eager to help. These fraudulent entities collect donations but never channel the funds to actual relief efforts. A charity will never ask you to pay money for help, and neither will government programs, they should be reported to the FEMA Disaster Fraud Hotline toll free at 1-866-720-5721. 

Contractor and Repair Scams

When homes are damaged, quick repairs are a priority. This urgency creates a fertile ground for contractor scams. Fraudulent contractors may offer to perform repairs at a low cost but either deliver shoddy work or disappear after receiving an upfront payment. 

Insurance Fraud 

Natural disasters often lead to a spike in insurance claims, making it easier for fraudulent claims to slip through the cracks. Some individuals or entities may exaggerate the extent of damage or file claims for properties that were not affected to receive payouts they are not entitled to. Other bad actors will act on behalf of an insurance company while having no association with the goal of stealing your personal information to commit identity fraud. 

How to Protect Yourself 

  1. Verify Charities: Always check the legitimacy of a charity through trusted platforms or government websites before making a donation. Consult trusted platforms like the Better Business Bureau's Scam Tracker, Charity Navigator or Charity Watch for verification. 
  2. Check Contractor Credentials: Before hiring anyone for repairs, verify their credentials, ask for references and never pay the full amount upfront. 
  3. Consult Your Insurance Company: Before filing a claim, consult with your insurance company about the proper procedures to follow to ensure you are not inadvertently involved in fraud. 

Natural disasters are a time of upheaval and vulnerability, making them ripe for various types of fraud. By being aware of the risks and taking proactive steps, you can protect yourself and ensure that aid goes to those who genuinely need it. Whether it is the aftermath of a hurricane like Idalia or wildfires like those in Hawaii, vigilance and education are your best defenses against becoming a victim of fraud.