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Virginia Consumers Warned About Post-Storm Scams

Hanna damage may open floodgates to thieves and fraudsters

September 5, 2008
With Tropical Storm Hanna bearing down on the southeast U.S. coast, Atlantic coast states are preparing for a natural disaster -- and the man-made aftermath. Just as law enforcement authorities in the Gulf Coast warned residents against scammers plying their trade in the wake of Gustav, Virginia authorities are doing the same to prevent con artists from taking advantage of Hanna's potential damage.

Virginia Attorney General Bob McDonnell has advised consumers the Virginia Post-Disaster Anti-Price Gouging Statute is now active, with the issuance of a State of Emergency by Governor Tim Kaine. The storm is expected to impact the Commonwealth this weekend.

The Virginia Post-Disaster Anti-Price Gouging Act, which became law on July 1, 2004, prohibits the charging of "unconscionable" prices for "necessary goods and services" within the affected area during the 30 day period following issuance of a declared state of emergency. The basic test under the statute is whether the price charged for the goods or services "grossly exceeds" the price charged immediately (within 10 days) before the disaster. "Necessary goods and services" includes those goods or services for which demand does, or is likely to, increase as a result of the disaster.

McDonnell warns that natural disasters often bring out the scammers. He says consumers should always request identification from anyone identifying themselves as a "disaster official" or "disaster worker." Some con artists pose as government officials and claim that a "processing fee" must be paid to secure disaster relief payments or loans. Others have pretended to be safety inspectors who will tell you expensive or unnecessary repairs must be done immediately.

Job listings for post-disaster work (such as flood clean-up or repair work) should also be approached with caution. Job "opportunities" that require you to make an advance fee payment before the job starts are not likely to provide actual employment. Additionally, classified ads asking you to call a 900 number for job referrals may be nothing more than an expensive way for someone to read you classified ad job listings while you are being charged for the call.

Home repair companies will arrive at disaster sites in response to the high demand for their services resulting from widespread property damage. Often disreputable companies hoping to make easy money are among them. They may require you to pay them before doing the work, do a shoddy job, or add extra costs throughout the job. To avoid being taken advantage of in this way, follow these tips:

• Work with contractors you know or local firms with roots in the community.

• Ask people you trust for contractor referrals.

• Ask the contractor for references and check them.

• Get written estimates from several firms.

• Do not do business without a written contract. Be sure that all guarantees, promises, and details are in writing.

• Do not pay large sums in advance and never make final payment until all work is completed to your satisfaction.

• Be extra cautious when a contractor comes to your door soliciting your business, offers you discounts for finding other customers, or "just happens to have" materials left over from a previous job.

In addition to home repair services, door-to-door solicitors may offer a variety of products for use after the disaster. Some door-to-door solicitors are not legitimate. Remember these tips when someone comes to your door to sell you something:

• High pressure sales tactics are often a part of fraudulent activity. Do not be hurried or intimidated. The salesperson is at your door uninvited and remains there only at your courtesy.

• Be extra cautious about letting someone into your home. Never let anyone into your home without first asking for identification.

• Under Virginia law, you have three days to cancel sales made at your home if the product or service costs $25 or more.

• Your right of cancellation may be waived by you in an emergency. Be very cautious about signing a document that waives your right to cancel the sale. Read anything you are asked to sign very carefully.

• If you decide to purchase from or use the services of a door-to-door solicitor, get all information and promises in writing; but remember, without a bricks and mortar business location, it is easy for these individuals to relocate and make it impossible for you to find them should legal recourse become necessary.

If your home, property, or motor vehicles have been damaged, you may want to contact your insurance company to see if the damage is covered under your insurance policy. Your insurer may send an appraiser to inspect the damage, or they may ask that you take photographs to document the damage, obtain repair estimates, and then forward the photographs and repair estimates for review and processing. These practices are standard and legitimate.

Emergency situations, and disasters in particular, attract those who engage in telemarketing fraud. Never provide credit card or bank account information over the phone unless you initiated the call and are familiar with the business. Always ask for written information about the product or services being offered. And remember: "If it sounds too good to be true, it probably is."

While there are many legitimate organizations that provide relief to disaster victims, there are those who are willing to collect funds for non-existent charities and pocket the money. Solicitations may come by phone, mail, or in person. Always follow these tips when considering a charitable donation:

• Only give to disaster relief charities you know are reliable.

• Beware of "copy-cat" names that are similar to those of reputable charities but not exactly the same.

• Do not be pressured into giving. Legitimate organizations will not expect you to contribute immediately.

• Ask for written information. Legitimate organizations will give you materials about the charity's mission, how your donation will be used, and proof that your contribution is tax-deductible.

• Just because a "charity" has a tax identification number does not mean that it is a charitable organization or that your contribution is tax-deductible.

• Ask how much of the donation will go to the program you want to support and how much will go to administrative or fundraising costs. Legitimate charities will be able to give you this information.

• Avoid cash donations. Make checks payable to the charitable organization and not to an individual collecting a donation.

• Verify the charity's registration with the Virginia Office of Consumer Affairs at 804-786-2042 or 1-800-552-9963 (if calling from outside the Richmond area).

If you are seeking a loan quickly -- perhaps to rebuild your damaged home or business -- beware of loan brokers who promise that you are "guaranteed" a loan if you pay an up-front fee. The fee might be small or as much as several thousand dollars. Legitimate lenders rarely, if ever, "guarantee" a loan before evaluating a person's creditworthiness. While legitimate lenders may require payment of application fees, appraisal fees, or credit report fees, these fees never are required before the lender is identified and the application process is completed.

Be wary of ads that provide a 900 number but do not disclose the cost of the call. Also, beware of promises that a bad credit history will not keep you from getting a loan.

If you are part of a public water system and are concerned about your water, contact your local water utility department about water safety problems and what to do. For questions about private wells, contact your local health department or the nearest regional office of the state health department. Some firms may try to sell you overpriced or unnecessary water treatment devices or offer to test your water for free and then tell you that your water is contaminated when it is not, in order to induce such purchases.

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