The devastation left behind by Hurricane Ian is a stark reminder of the incredible power delivered by many different types of natural disasters. Unfortunately, it also is a reminder of the unethical predators that victimize nonprofit organizations by committing acts of fraud. Many nonprofit organizations assist with the recovery efforts put together by local civic and political leaders. Fraudsters take advantage of the good nature of the people running nonprofit organizations to commit scams that steal money from the neediest victims of a natural disaster.
Don’t let disaster fraud victimize your nonprofit. Let’s review the types of fraud that can cause your nonprofit to suffer substantial losses.
Delivering the products and services required to help victims recover from natural disasters often requires tight coordination among several nonprofit organizations. Scammers take advantage of the large network of nonprofits by fraudulently posing as a helpful organization. If your nonprofit organization gets involved with a network of nonprofit organizations, verify the legitimacy of every organization before agreeing to complete transactions. For example, if another nonprofit organization wants to send you a large order of generators, ensure the legitimacy of the nonprofit by conducting an extensive background check.
Unethical contractors take advantage of the most vulnerable victims of a natural disaster by demanding payment upfront to complete repair projects. Instead of fulfilling their side of the deal, unethical contractors skip town with the money. The same principle applies to nonprofit organizations. A general contractor promises to complete a project for a nonprofit only to fail to uphold its side of the agreement.
You can research contractors by reviewing profiles uploaded to the Better Business Bureau (BBB) website or by checking with your state’s home builders association. Reputable contractors should provide you with proper credentials, which include licenses and insurance coverage.
Identity theft is not just a major problem for consumers. Nonprofit organizations can have sensitive financial information stolen by unscrupulous parties. In the aftermath of a natural disaster, criminals flock to the area to retrieve paperwork from both individuals and organizations that contain sensitive financial information, such as bank and credit card account numbers. If you detect suspicious activity on one or more of your nonprofit organization’s accounts, take action right away by notifying the appropriate institutions. Make sure to destroy all sensitive documents containing the financial information associated with your nonprofit organization.
As the aftermath of Hurricane Ian demonstrated, heartless criminals took advantage of acute supply shortages to price gouge consumers. These bad actors take advantage of desperate people to make a significant profit. If your nonprofit encounters someone charging outrageous prices for essential products and services, do not conduct business with the bad actor and then inform the proper state agency that addresses price gouging incidents.
The Bottom Line
After a natural disaster, the urge to move swiftly can become a major mistake if the quick actions lead to falling for one or more of the most common scams pulled off by bad actors. Your nonprofit should act with a cautious sense of urgency by verifying the credentials of every organization that wants to conduct business with you. You can report scams to the National Center for Disaster Fraud at 866-720-5721 or justice.gov/disaster-fraud.