Wednesday, May 11, 2011

Beware of Fraud After a Disaster

Some of the lesson learned from disasters like Hurricane Katrina, the oil spill in the Gulf of Mexico and the Haitain earthquake are that there will be many incidences of fraud as devastated areas rebuild.

Alabama Attorney General Luther Strange and the Alabama Home Builders Association join together to offer several tips to protect yourself from fraud when hiring a building contractor:

Before You HIRE a Contractor:
  • Verify the contractor's name, address, and phone number.  Be wary of workers who give you pager numbers or post office boxes rather than street addresses.
  • Request references on similar work performed by the contractor.  Ask to see a job in progress and ask for the name and address of a customer who had work done over a year ago.
  • Make sure that your contractor has an occupational license from the Alabama Home Builders Licensure Board.  (General contractors licensed prior to January 1, 1992, are exempt.)
  • Obtain 2 or 3 bids for different contractors.  Get written estimates.
  • When comparing estimates, be sure each is based upon the same set of plans, specifications and scope of work.
  • Check with professional associations and licensing boards listed below to verify the worker's record.  Ask to see the contractor's pocket-sized license card. 
    • Home Builders Association of Alabama - 1-800-745-4222
    • Home Builders Licensure Borad - 1-800-304-0853
    • The Alabama Attorney General's Consumer Hotline - 1-800-392-5658
    • The local Better Business Bureau - 205 558-2222 (in Birmingham)
  • If you are having parts of your house remodeled, check to see if the remodeler has a professional designation such as the Certified Graduate Remodeler (CGR) which is awarded upon completion of coursework in technical courses, business management, contracts and law.
Before the Contractor BEGINS WORK:
  • Ask to see proof of workman's comp (when applicable) and liability insurance and is bonded.
  • Agree on finance charges and make a payment schedule.  Have a lawyer review the contract, if substantial costs are involved.
  • Make sure you have guarantees and warranties IN WRITING.
  • Agree on Start and Finish dates and PUT DATES IN WRITING.
  • Make sure the contract is SPECIFIC, including details about size, colors, materials, brands, and models.
  • Make sure the contract clearly states who will obtain the necessary permits.
  • Make all payments to the contractor by check, NEVER in cash.  Avoid paying in advance, if possible.  If not, a reasonable down payment is 30% of the total cost of the project.
  • Make sure you keep a copy of the signed contract at all times.
Here are some additional tips from FEMA on how to avoid scammers:
  • First of all FEMA employees DO NOT solicit or accept money
  • FEMA does NOT offer financial assistance in the form of vouchers.
  • ALWAYS ask for an ID.  If some is representing him/herself as a federal employee, such as an inspector they should be able to produce an official, laminated photo identification.
  • Just because a person is wearing a FEMA or U.S. Small Business Administration (SBA) shirt or jacket is not absolute proof of that person's affiliation with the government.
  • ALWAYS safeguard your personal information.  Do NOT give your personal information such as Social Security number or bank information to individuals claiming to be affiliated with the federal government.  FEMA inspectors NEVER require this information.
    • FEMA WILL request an applicant's Social Security or bank account information during the first phone call when the applicant calls FEMA's registration line.  (You call them, they don't call you.)  On any follow-up calls, a FEMA representative may ask you to verify your last 4 digits of your Social Security number.  ***If you don't make the phone call, do NOT provide confidential information, it might be a scam.***
  • BEWARE of people going door-to-door or phoning disaster survivors who claim to be building contractors.  NEVER give any personal information to these people, they may not be legitimate.
  • FEMA inspectors NEVER charge you for their services and are only there to verify damages.  They do not hire or endorse specific contractors to repair damage.
If you think that you have been a victim of a scammer, think you have been involved in a fraudulent transaction or suspect anyone of committing fraudulent activities, you should call the FEMA Disaster Fraud Hotline at 1-866-720-5721.  This number is staffed with a live operator 24/7.

You can also contact your local law enforcement agency or the Alabama Office of Consumer Affairs at 1-800-392-5658.

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