Federal Agencies Warn Businesses and Consumers About Hurricane-Related Scams

With another major hurricane on the way, three federal agencies are warning companies not to take advantage of these natural disasters and cautioning consumers to watch out for the scams that often accompany these events.

Scammers often take advantage of people trying to recover from natural disasters and people who are looking to donate to help disaster victims, the Justice Department, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) said in a Wednesday (Oct. 9) press release.

The types of scams that often accompany natural disasters include fraudulent charities soliciting donations for victims, scammers impersonating government officials and seeking personal information or money, scammers promoting non-existent businesses or investment opportunities related to disaster recovery, price gauging for essential goods and services, and businesses colluding to overcharge customers under the cover of supply chain disruptions, according to the release.

The federal agencies said in the release that consumers can avoid these scams by remembering that only scammers will insist on payments by wire transfer, gift card, payment app, cryptocurrency or cash; avoiding anyone who promises access to disaster relief in exchange for a fee; getting estimates from more than one contractor before signing a contract for work; and getting a written contract and reading it before signing it.

The agencies added that they will be targeting companies that exploit people through illegal behavior.

After Hurricane Katrina, the Justice Department established the National Center for Disaster Fraud (NCDF) to deter, investigate and prosecute these types of fraud.

“The Justice Department, including the NCDF, stands ready to prevent these bad actors from fraudulent activity,” U.S. Attorney Ronald C. Gathe Jr. for the Middle District of Louisiana, who is also executive director of the NCDF, said in the release. “We are here to support victims of natural disasters during these difficult times together with our state, local and federal partners, and agencies.”

Fraud of all kinds has been increasing. The FBI said in April that American consumers and business owners lost a record $12.5 billion to online scammers in 2023, a figure that was 22% higher than that of the previous year.