Jeffrey Wade
Flood insurance fraud is a common occurrence in the aftermath of natural disasters, with scammers taking advantage of victims' vulnerability. Fraud can occur when a person or business provides false information to receive a financial payout from an insurance company. Scammers may pose as government agents or insurance adjusters, and insurance companies may defraud the government by attributing structural damage to flooding rather than wind or other forces covered by their policies. To avoid falling victim to fraud, consumers should be cautious of unsolicited investment opportunities, high-pressure sales tactics, and requests for personal information. If you suspect fraud, it is important to report it to the relevant authorities, such as the FEMA Disaster Fraud Hotline, the Department of Financial Regulation (DFR), or the Federal Communications Commission (FCC).
| Characteristics | Values |
|---|---|
| When does flood insurance fraud usually occur? | After a natural disaster or storm |
| Who does the fraud usually involve? | Homeowners, contractors, or other third parties |
| What do fraudsters do? | Manipulate circumstances or provide false information to receive a financial payout |
| What should you do if you receive a phone call about an insurance claim or policy? | Do not give out personal information or agree to any payment until you can independently verify that the call is legitimate. Hang up and contact your agent or the company directly using the number on your account statement |
| What are some red flags? | Unsolicited emails or social media messages, aggressive cold callers promoting flood-related investment opportunities, claims of guaranteed returns, unrealistic high returns, or low/no investment risk |
| How to report fraud? | Call the FEMA Disaster Fraud Hotline toll-free at 1-866-720-5721, notify FEMA at 1-866-720-5721 or [email protected], file a complaint with the FCC about phone scams, or with the FTC about fraud |
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What You'll Learn
- Recognising fraud: Scams can occur via phone, text, email, and in-person
- Who to contact: Report fraud to relevant authorities, e.g. FEMA Disaster Fraud Hotline?
- Protecting yourself: Do not give out personal information or make quick financial decisions
- Verifying identities: Independently confirm the identity of anyone claiming to be from your insurance company
- Red flags: Be cautious of unsolicited offers, high-pressure sales tactics, and guaranteed returns
Recognising fraud: Scams can occur via phone, text, email, and in-person
Phone Calls
- If you receive a call from someone claiming to be from your insurance company, hang up and contact your agent or the company directly using the number on your account statement.
- Never give out policy numbers, coverage details, or other personal information to companies with whom you have not entered into a contract.
- If you receive a call about an insurance claim or policy, do not give out any personal information or agree to any payment until you can independently verify that the call is legitimate.
- Be cautious of aggressive cold callers promoting flood-related investment opportunities, especially those from newly formed companies touting unproven or new technologies or products.
- If you are unsure about the legitimacy of a caller, contact your local government or relevant authorities for guidance. Many states have online databases where you can verify the identity of contractors and home improvement companies.
Texts and Emails
- Be wary of unsolicited emails or social media messages promoting flood-related investment opportunities or asking for donations.
- Do not click on any links in unsolicited emails, as they may contain computer viruses.
- If you receive suspicious texts or emails claiming to be from your insurance company or a government agency, contact the company or agency directly using the official contact information on their website to verify the communication.
In-Person Interactions
- Be cautious of contractors or home improvement companies that approach you in person or go door-to-door after a flood.
- Ask for proper identification, customer referrals, and a contractor's license before hiring someone to make repairs to your home or property.
- Be wary of contractors who offer to waive insurance deductibles or provide discounted rates, as this may be a "pay for something you never receive" scam.
- If someone claims to be a federal official or FEMA inspector and asks for money or personal information, they are an imposter. FEMA employees are required by law to present a laminated photo ID and will never charge for disaster assistance, application support, or inspections.
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Who to contact: Report fraud to relevant authorities, e.g. FEMA Disaster Fraud Hotline
Natural disasters like floods can give rise to financial scams as bad actors take advantage of times of vulnerability. If you suspect fraud, report it to the relevant authorities as soon as possible.
In the United States, you can report suspected fraud to the Federal Emergency Management Agency (FEMA) Disaster Fraud Hotline toll-free at 1-866-720-5721. You can also report other fraudulent activities during or following a natural disaster by calling FEMA at 1-866-720-5721 or emailing [email protected].
If you believe you are a target of a scam, hang up and contact your insurance agent or company directly using the number on your account statement. Do not give out any personal information or agree to any payments until you can independently verify that the caller is legitimate.
Additionally, you can file a complaint with the Federal Communications Commission (FCC) about phone scams or with the Federal Trade Commission (FTC) about fraud. The FCC also provides consumer guides with tips on avoiding caller ID spoofing and robocalls to help you avoid being scammed.
For insurance or investment-related scams, you can also contact your state's Department of Financial Regulation (DFR). For example, Vermont residents can report known or suspected financial scams to the DFR by emailing [email protected] or calling 800-964-1784.
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Protecting yourself: Do not give out personal information or make quick financial decisions
Natural disasters like floods can bring out bad actors looking to take advantage of people in vulnerable situations. In the aftermath of a flood, be cautious of potential insurance-related and investment fraud and scams.
If you receive a phone call about an insurance claim or policy, do not give out any personal information or agree to any payment until you can independently verify that the caller is legitimate. If the caller claims to be from your insurance company, hang up and contact your agent or the company directly using the phone number on your account statement.
Delete unsolicited emails or social media messages and hang up on aggressive cold callers promoting flood-related investment opportunities, especially those from newly formed companies touting unproven or new technologies or products. Be wary of claims of guaranteed returns, high returns, or low/no investment risk. Remember that every investment involves some degree of risk. Always do your research and check that both the seller and investment are licensed and registered.
Scammers may also pose as government agents or insurance adjusters. Remember that officials with government disaster assistance agencies will not call or text asking for financial account information, and there is no fee required to apply for or receive disaster assistance from FEMA or the Small Business Administration. Anyone claiming to be a federal official who asks for money is an imposter.
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Verifying identities: Independently confirm the identity of anyone claiming to be from your insurance company
Verifying the identity of anyone claiming to be from your insurance company is crucial to prevent fraud and protect your personal information. Here are some detailed steps to confirm identities independently:
Firstly, if you receive a phone call or communication claiming to be from your insurance company, hang up and contact your insurance provider directly. Use the phone number on your account statement or from their official website. Do not call the number provided by the caller, as it may be fraudulent.
Secondly, when you contact your insurance company, ask questions to verify their identity. Inquire about specific details that only an authentic representative should know. For example, ask about your policy number, personal information, or previous interactions with the company.
Thirdly, utilize multiple data sources to cross-reference the information you have been provided. This could include checking against credit header data, OFAC lists, FEIN information, international records, and work affiliations. This comprehensive approach will help ensure the legitimacy of the caller.
Additionally, be cautious when providing personal information. Avoid sharing sensitive details such as policy numbers, coverage details, or personal information with unverified sources. If someone pressures you for such information, it could be a scam. Always take your time to verify their identity independently before disclosing anything confidential.
Finally, trust your instincts. If something feels off about the call or communication, it is better to err on the side of caution. Fraudsters often use tactics that create a sense of urgency to rush your decision-making. Take your time, remain vigilant, and use reputable sources to research insurance agents and companies before sharing any confidential information.
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Red flags: Be cautious of unsolicited offers, high-pressure sales tactics, and guaranteed returns
Flood insurance fraud usually occurs in the aftermath of natural disasters, when bad actors take advantage of people's vulnerability. Private insurers can defraud the government by attributing structural damage to flooding, which is covered by the Federal Emergency Management Agency (FEMA), rather than to wind or rain, which fall under private property insurance policies.
Be vigilant against flood insurance fraud by watching out for these red flags:
- Unsolicited offers: Be cautious of unsolicited offers, especially from new companies promoting unproven technologies or products. If you receive cold calls, emails, or social media messages, delete them and hang up on callers.
- High-pressure sales tactics: Fraudsters know that consumers may be eager to purchase insurance coverage after a disaster. Be wary if someone tries to sell you insurance using high-pressure tactics or a sense of urgency to force a quick decision. Take your time to research insurance agents and companies before agreeing to any purchase.
- Guaranteed returns: Be suspicious of any claims of guaranteed or unusually high returns with low or no investment risk. Every investment involves some level of risk, so use common sense and always check before investing. Verify that the seller and investment are licensed and registered; if not, they may be operating illegally.
- Inconsistencies: Pay attention to inconsistencies in the details provided by the insurance agent or company. For example, discrepancies in signatures, heights, weights, physical descriptions, license numbers, or Social Security numbers could be red flags.
- Payment methods: Be cautious if a money order or other cash equivalent is requested as payment for the initial premium, especially if it is a large single premium. Also, be alert if the premiums exceed the applicant's apparent financial means or are paid by someone other than the insured or policy owner.
If you suspect insurance fraud, report it to the relevant authorities, such as the Department of Financial Regulation (DFR) or the National Association of Insurance Commissioners.
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Frequently asked questions
Natural disasters like floods can give rise to financial scams as bad actors take advantage of times of vulnerability. Scammers may pose as government agents or insurance adjusters and use phone, text, mail, email, and even go door-to-door to target residents of affected areas.
If you get a phone call about an insurance claim or policy, do not give out any personal information or agree to any payment until you can independently verify that the call is legitimate. If the caller says they are from your insurance company, hang up and contact your agent or the company directly using the number on your account statement.
Be wary of unsolicited emails or social media messages and aggressive cold callers promoting flood-related investment opportunities, especially those from newly formed companies touting unproven or new technologies or products. Claims of guaranteed returns, unrealistic high returns, or low/no investment risk are classic red flags.
To report suspected fraud, call the FEMA Disaster Fraud Hotline toll-free at 1-866-720-5721. Alternatively, you can notify FEMA at 1-866-720-5721 or [email protected]. You can also file a complaint with the FCC about phone scams or with the FTC about fraud.
You can report known or suspected financial scams by email to the Department of Financial Regulation (DFR) at [email protected].
