How to Avoid Post-Disaster Scams

As Texas and parts of the South-Central U.S. recover from widespread flooding and hail damage, the National Insurance Crime Bureau (NICB) reminds consumers to beware of buying flood-damaged vehicles and falling victim to unscrupulous home repair contractors.

The worst losses occurred in Texas where hail caused an estimated $600 million worth of insurance claims for damage to homes and autos.

Car Sales Fraud

As with all major natural disasters, NICB assists law enforcement agencies, insurance and car rental companies with identifying and cataloging water-damaged vehicles to keep them from being resold to unsuspecting consumers.

Already, authorities estimate that thousands of vehicles may have been flooded.

“NICB agents see it time after time. Natural disasters bring out dishonest salvage dealers who don’t tell you that the vehicles they’re selling are heavily water-damaged,” said NICB President and CEO Joe Wehrle.

“Consumers need to know that these vehicles may appear advertised for sale without any indication that they were affected by the flooding. As always, buyers should be careful when considering a used vehicle purchase in the weeks and months following a disaster like this.”

To help avoid buying a vehicle that has been declared salvage (including flood-damaged vehicles), NICB recommends that buyers take advantage of its free online service called VINCheckSM. VINCheck contains vehicle data from insurance companies representing about 88 percent of the personal auto insurance market and lets buyers see whether a vehicle has ever been declared as “salvage” or a total loss. It also alerts users if a vehicle has been stolen and is still unrecovered.

Home Repair Fraud

In the weeks ahead, homeowners in disaster areas should be alert to the potential for fraud by unscrupulous contractors and home repair businesses.

Roofer“Fraud is an unfortunate reality in post-disaster environments,” said Wehrle. “As any recovery gets underway, fraudsters often converge on affected areas to scam disaster victims out of their money while promising to do repairs. The last thing victims of disaster need is to be victimized again.”

After a disaster, contractors often go door-to-door in affected neighborhoods offering clean up and/or construction and repair services. Most are reputable, but many are not. One common scheme is to pocket a down-payment and then never show up for the job, or never complete a job that was started. Another scheme is to use inferior materials and perform shoddy work that is not up to code in order to increase profit.

“If you didn’t request it, reject it”

Almost all of these scams are unsolicited—they begin with a visit from a contractor who seeks to help victims rebuild. That is why NICB recommends that “if you didn’t request it, reject it.” Before hiring any contractor, call your insurance company. Your insurance company will honor its policy so there is no need to rush into an agreement with a contractor who solicits your repair work—especially when you did not request it.

Unlike other states, Texas does not require a license for a roofing contractor nor is one required for solicitation. Local jurisdictions, however, may impose certain requirements before contractors can solicit work within their boundaries. One example is the City of Garland that requires anyone soliciting for the purpose of selling or offering to sell goods or services, must first retain a solicitation permit through the Garland Police Department.

NICB suggests you consider these tips before hiring a contractor:

  • Get more than one estimate
  • Get everything in writing. Cost, work to be done, time schedules, guarantees, payment schedules and other expectations should be detailed
  • Demand references and check them out
  • Ask to see the salesperson’s driver’s license and write down the license number and their vehicle’s license plate number
  • Never sign a contract with blanks; unacceptable terms can be added later
  • Never pay a contractor in full or sign a completion certificate until the work is finished and ensure reconstruction is up to current code
  • Make sure you review and understand all documents sent to your insurance carrier
  • Never let a contractor pressure you into hiring them
  • Never let a contractor interpret the insurance policy language
  • Never let a contractor discourage you from contacting your insurance company

Consumer Resources

  • For a free brochure with tips to avoid post-disaster fraud, click here.
  • For useful checklists, including how to spot flood and salvage vehicle scams and post-disaster contractor repair schemes, click here.
  • For free consumer access to the vehicle salvage records of participating NICB member insurance companies who collectively provide 88 percent of the auto insurance in force today, access NICB’s VINCheck.

On the Lookout For Fraud in Tornado Damaged Areas

The Dallas Morning News recently went out with the Texas Department of Insurance and witnessed firsthand their fight against roofing scams after the Dec 26th tornadoes hit the Dallas area.

Roofers

Workers are removed from a roof in Rowlett, TX for not having a permit.

As we reported yesterday, after a disaster, contractors will often go door-to-door in neighborhoods that have sustained damage to offer clean up and/or construction and repair services. Most of these people are reputable, but many are not. The dishonest ones may execute schemes to defraud innocent victims. One common scheme is to pocket the payment and never show up for the job, or never complete a job that was started. Another scheme is to use inferior materials and perform shoddy work that is not up to code in order to pocket more profit.

Last year the TDI received 15,000 complaints regarding insurance fraud.

The best part is that roofers are not the sharpest shingles in the box. They don’t realize as they are being interrogated by TDI police that the state insurance department has no regulatory authority over them.

Here’s a video of the disaster area as law enforcement and TDI officials were on the lookout for potential fraud.

Hurricane Katrina: A 10-Year Retrospective

Katrina10YearsBeginning today—and every day this week—the National Insurance Crime Bureau (NICB) will release segments of a five-part documentary video that provides first-hand recollections of NICB employees and law enforcement personnel as they reflect on their roles in the aftermath of Hurricane Katrina.

Video release schedule:

Monday, Part 1: Multistate Devastation

Tuesday, Part 2: NICB’s Initial Response

Wednesday, Part 3: Vehicle Identification

Thursday, Part 4: Coast to Coast Impact

Friday, Part 5: Birth of VINCheck

Widespread destruction, NICB responds

While Katrina impacted parts of Alabama, Florida and Mississippi, its most widespread destruction occurred in Louisiana in and around New Orleans. After making landfall on August 29, 2005, Katrina’s heavy rainfall and significant storm surge caused breaches in a number of the levees protecting New Orleans from Lake Pontchartrain. As a result of those levee failures, roughly 80 percent of New Orleans was underwater by August 31.

In terms of property damage, Hurricane Katrina was the most costly on record with insured losses estimated at over $41 billion*. Part of that figure came from insurance claims on more than 300,000 vehicles damaged or destroyed by Katrina—vehicles that presented an attractive opportunity for fraud.

KatrinaFloodedVehiclesRecognizing the unprecedented number of vehicles that were flooded or otherwise damaged from Katrina, NICB dispatched teams to the region and established the Gulf Coast Task Force (GCTF) which operated from two locations: Baton Rouge, La. and Mobile, Ala. Over the next several months, NICB personnel from all over the United States were rotated through the GCTF where they worked side-by-side with state and local law enforcement officers in identifying and cataloging the thousands of damaged vehicles that littered every part of New Orleans and Mobile—and most points in between—in Nature’s random display of destruction.

As the vehicle inventory process took shape, GCTF personnel had some time to pursue allegations of insurance fraud which NICB was receiving on its hotline almost from the moment Katrina made landfall. Even as search and recovery efforts were underway, some saw opportunity to exploit tragedy for personal and illicit gain. NICB investigated everything from bogus claims for flooded vehicles that were nowhere near the storm area to yachts being scuttled by their owners, but blamed on Katrina so they could collect an insurance payoff.

The birth of VINCheck

VINCheckTo prevent unsafe flood vehicles from entering the commerce stream disguised as legitimate used vehicles, NICB created the “Katrina Flood Vehicle Database.” This database was populated with the vehicle identification numbers (VINs) of every Katrina-damaged vehicle that was insured by one of NICB’s 1,100 member insurance companies. Although initially developed to more efficiently share data with law enforcement, state fraud bureaus, motor vehicle departments and insurance companies, NICB realized that allowing consumers to have free access to this data was the best way to help them protect themselves from making an expense—and potentially life-threatening—flood vehicle purchase.

Within two months of Katrina’s landfall, The Katrina Flood Vehicle Database was opened to the public. As this free consumer protection grew in popularity and usage, its name evolved into VINCheck. With the new name and with the cooperation of participating insurance companies, VINCheck not only identified flood vehicles, but any vehicle that had been declared a total loss, salvage, or was an unrecovered stolen vehicle.

Since its creation, VINCheck has been the most visited page on the NICB.org website. From January 1, 2009, through December 31, 2014, more than 5 million VINs have been searched through VINCheck. From those queries, 48,442 theft records and 507,110 salvage records were identified meaning that VINCheck may have saved thousands of innocent consumers from experiencing significant financial losses—or worse.

The hurricanes of 2005, of which Katrina was the Queen of Destruction, challenged all levels of government as well as state and local law enforcement, the insurance industry and disaster relief agencies. The lessons learned from Katrina helped government and non-government officials deal with another mega storm when 2012’s Sandy devastated the Eastern Seaboard and other inland areas.

While natural disasters are an unfortunate reality of life we can understand them. To some extent, we can prepare for them and mitigate their damage. But when ill-intentioned people use these events to commit fraud against a population already reeling from a disaster, they will eventually attract law enforcement’s attention with NICB agents at their side.

As we did after Hurricanes Katrina, Rita, Wilma, Ike, and Sandy, NICB’s nationwide distribution of investigative and analytical resources are poised to deter, detect and defeat acts insurance fraud that would cause further harm to the legitimate victims of catastrophes.

*The Insurance Fact Book, 2015, p. 148, Insurance Information Institute, New York.

Insurance Fraud Headlines for May 29, 2015

Here are the top insurance fraud stories for today:

* Texas Storms Leave Thousands of Vehicles Flooded (NICB)

* Big brother is watching: It’s good for you and bad for the bad guys (Chicago Tribune)

* Car insurance: Car insurance policies (CNN Money)

* Here’s A List Of The Most Stolen Chevrolet Camaros Of All Time (GM Authority)

* Top Ten Truisms For Motorcyclists (Yahoo Autos)

* Lt. Governor Taylor Announces Insurance Fraud Sentencing  (ODI)

* Fake Social Security Card Used in Insurance Fraud Scam (Command Investigations)

Texas Storms Leave Thousands of Vehicles Flooded

Houstoncars

Flood-damaged cars in Houston

DES PLAINES, Ill. – As Texas and parts of the South-Central U.S. recover from record-breaking rainfall and widespread flooding, the National Insurance Crime Bureau (NICB) stands ready to assist law enforcement agencies, insurance and car rental companies with identifying and cataloging water-damaged vehicles to keep them from being resold to unsuspecting consumers. Already, authorities estimate that thousands of vehicles may have been flooded. “Unfortunately, natural disasters bring out dishonest salvage dealers who don’t tell you that the vehicles they’re selling are heavily water-damaged,” said NICB President and CEO Joe Wehrle.

“Consumers need to know that these vehicles may appear advertised for sale without any indication that they were affected by the flooding. As always, buyers should be careful when considering a used vehicle purchase in the weeks and months following a disaster like this.”

NICB agents are already working with law enforcement and member companies to identify these damaged vehicles to help keep would-be buyers from becoming fraud victims.

A History of Helping When Disaster Strikes

In the aftermath of Hurricane Katrina 10 years ago this August, NICB agents worked side by side with law enforcement officials to inspect thousands of vehicles damaged by flood waters. As a result of that unprecedented effort, NICB established a first-of-its-kind consumer protection service known today as VINCheck. It allows car buyers to see whether a vehicle has ever been declared as “salvage” or a total loss by an NICB member that participates in VINCheck. Insurers representing about 88 percent of the personal auto insurance market provide their salvage data to the program. It also alerts users if a vehicle has been stolen and is still unrecovered. VINCheck is a free public service available at www.nicb.org.

NICB encourages those entities required by law to report flood-damaged vehicles to the National Motor Vehicle Title Information System (NMVTIS) which currently includes information on 96 percent of all U.S. vehicles. Currently, 44 states report data to the system which contains approximately 20 million salvage or total loss records.

Potential for Fraud

In the weeks ahead, consumers should be on the lookout for other post-flood fraud schemes such as towing companies that try to pressure them into using their service and then charge exorbitant towing and storage fees. In addition, homeowners in disaster areas should be alert to the potential for fraud by unscrupulous contractors and home repair businesses. “Fraud is an unfortunate reality in post-disaster environments,” said Wehrle. “As the initial recovery in Texas gets underway, fraudsters are already scheming to converge on the affected areas in order to scam disaster victims out of their money while promising to do repairs. The last thing victims of disaster need is to be victimized again.”

Consumer Resources

* For a free brochure with tips to avoid post-disaster fraud, click here.

* For useful checklists, including how to spot flood and salvage vehicle scams and post-disaster contractor repair schemes, click here.

* For free consumer access to the vehicle salvage records of participating NICB member insurance companies who collectively provide 88 percent of the auto insurance in force today, access NICB’s VINCheck.

NICB to Boston-Area Homeowners: Beware of Insurance Scammers

BostonSnow

Courtesy: Gene J. Puskar/AP

DES PLAINES, Ill., Feb. 12, 2015 —  As the Northeast continues to get pounded by storm after storm, there’s one more threat that Bostonians need to watch out for:  shady contractors, or “storm chasers,” looking to make a fast but fraudulent buck using your homeowners insurance. Heavy snowfalls are damaging roofs, resulting in an unusually large number of insurance claims, and those storm chasers can’t wait to get their hands on your money.

After a disaster, contractors will often go door-to-door in affected neighborhoods offering clean up, construction or other repair services. Most of these business people are reputable, but many are not. The dishonest ones may execute schemes to defraud innocent victims, such as:

  • pocketing the payment and never showing up for the job;
  • never completing a job that was started; or
  • using inferior materials and performing shoddy work that’s not up to code.

Almost all of these scams are unsolicited—they begin with a knock on the door from a contractor seeking work. The National Insurance Crime Bureau (NICB) recommends that “if you didn’t request it, reject it.” If you have storm damage, call your insurance company first.

NICB offers these tips before hiring a contractor:

  • Take pictures of your property before, during and after flooding or other damage
  • Get more than one estimate
  • Get everything in writing:  cost, work to be performed, work and payment schedules, guarantees, and any other expectations
  • Demand references and check them out
  • Ask to see the salesperson’s driver’s license and write down the license number and their vehicle’s license plate number
  • Never sign a contract with blanks; unacceptable terms could be added later
  • Never pay a contractor in full or sign a completion certificate until the work is finished and ensure reconstruction is up to current code
  • Make sure you review and understand all documents sent to your insurance carrier
  • Never let a contractor pressure you into hiring them or letting them do unnecessary work
  • Never let a contractor interpret the insurance policy language
  • Never let a contractor discourage you from contacting your insurance company

For more on disaster fraud, watch this video.