The Consumer Financial Protection Bureau
(CFPB) reposted one of its earliest blog postings today to help the victims of
Hurricane Sandy avoid the types of crimes that invariably follow any big disaster. The Bureau said consumers should be watchful
as they start the clean-up and repairs and be aware that some crooks live for
the opportunities a disaster presents.
Homeowners can be victimized by shoddy workmanship or by persons using
the access a disaster presents to set victims up for larger scams.
Cleanup from a disaster can be expensive
and unfortunately many families don't have a ready source of emergency funds
and the need to borrow many in a hurry can make storm victims easy targets for
financing schemes. For examine, in the "home improvement loan scam" a
contractor comes to the homeowner and proposes repairs at an attractive rate
and offers to arrange the financing.
Even where the homeowner is reluctant he can pressured by threats to
leave the work undone unless he signs a bewildering number of papers and forms
which only later does he realize have obligated him to a home equity loan with
high interest and points and with his house as the collateral. Then the work is done poorly or may not even be
CFPB offered homeowners some common
warning signs that should alert them to potential scams.
The contractor demands full payment
up front or in cash only.
- The contractor has no physical address or refuses to
- You have to disclose personal financial information
(perhaps to "speed up payment") to start the repair or lending process.
- If you have to borrow to pay for the repairs, the
contractor steers you toward a particular lender or tries to act as an
intermediary between you and a lender.
- You are asked to sign something without enough time to
When you are planning your clean-up
and repairs CFPB advisers homeowners to take the following precautions:
- Carefully question strangers offer to do work without
- Never give any personal financial information, such as
an insurance number or Social Security Number.
- Read and be sure you understand every document before
signing it and ask questions about anything you do not understand.
- Do your own research before borrowing any money to pay
- Get a loan quote from someone who is not recommended by
your contractor and compare their amounts, repayment schedules, and rates.
If they differ significantly, ask both parties why.
Even persons far removed from Sandy's
destruction can be targeted by crooks with phony charities or investment
schemes. The CFPB's
blog post has other tips and resources to help consumers avoid these