How to avoid scammers after a natural disaster

0:00NPR.

0:10Natural disasters leave devastation behind. Charred houses, flooded streets, lost possessions, and often, tragically, loss of life. But for many survivors, the danger doesn't end there. That's when another crisis hits, contractor scams. This is The Indicator from Planet Money. I'm Waylon Wong, and I'm here with reporter Navina Sadasavam from Grist, a nonprofit newsroom covering climate change. Navina, thanks for coming on the show. Hi, thanks for having me. So you have been reporting on the disaster economy as your beat, and that is like the systems that turn disaster recovery into a marketplace.

0:48Exactly. Yeah. When people lose their homes to natural disasters, they're really desperate to rebuild. And that's often when scammers strike. In 2024, weather-related disasters caused$183 billion in infrastructure losses. So that's why contract of fraud has essentially become a really lucrative business. One estimate suggests in recent years that roughly 10 percent of post-disaster spending is lost to scams every year. So today on the show, how these scams work and what people can do to protect themselves. Plus the story of one fire-damaged homeowner in Southern California whose personal disaster turned into a legal and financial nightmare.

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2:17Zoom is more than meetings. It's a unified platform powering how people get work done. Learn more at zoom.com slash podcast and Zoom ahead. November 6, 2024 was just like any other day for Craig Crosby. Sunny, clear, slightly windy day. I went out that morning and cleaned the pool. He saw some smoke in the distance, but thought it was just another California wildfire. He left for a doctor's appointment, and when he returned a couple of hours later, his entire neighborhood was on fire. Visibility was about 15 feet. I had about 10 minutes to collect up what we had pre-planned as our exit strategy in case there was a disaster.

2:58Threw it in a vehicle and immediately left. Craig lives in Camarillo, a small city in Southern California. That day, a little over a year ago, the mountain fire swept through his town. Craig returned later that night to find his home and avocado orchard destroyed. The windows had melted, the walls were scorched, and everything reeked of smoke. We've now approached over$500 ,000 in damages. Roof, structures, windows, paint. The interior of the home was entirely totaled from smoke and ash damage. Even the swimming pool was burned. Oh my gosh, wow. A swimming pool burned. Wow, I've never heard that before.

3:40Kind of an unusual statement. Soon, salespeople from a franchise called One Silver Serve showed up offering help. And that's where it all began. Two of their salespeople came to the door, gave their presentation that we're here to help regardless whether you choose to use us or you don't choose to use us. We're happy to give advice and do whatever we can to help you. Craig was immediately wary because he's actually a very savvy guy when it comes to scams. He's the founder of the Counterfeit Report, which tracks counterfeit products across the country. The salespeople gave him an authorization form, but he was really careful and asked to mark up the form with additional clauses.

4:23He added that he only wanted them to inspect the property and recommend fixes, and also that all payments were to come from Auto Club, his insurance company. At that point, was there any reason for you to be suspicious? No, this was a nationally recognized company. Nationally recognized because One Silver Serve is a franchise of the company's serve pro. You may actually have seen the company's ads or their bright green trucks out and about. I felt that had, because of their advertising and media blitzes, had some credibility. And I felt that I'd also kind of done my due diligence at that point.

5:00But what followed next was a nightmare for Craig. Over 10 days, dozens of workers showed up. They cleaned walls. They tore out insulation. Craig had only initially wanted inspection and documentation. But he says he didn't stop them because the company had told him his insurance had approved the work. I was under the impression that this was my insurer's procedure, and this is what they expected to be done in handling wildfire incidences, is to go in and do the cleaning, do the inspection, do the hazardous materials inspections, do the environmental analysis, and say, what are the issues and what are we facing?

5:38But that was not the case. When Craig eventually called his insurance agent, he learned that they had never signed off on the work. In fact, the agent told him the franchise was on their internal blacklist. One Silver Serve ultimately sent him a bill for more than$62 ,000. When he refused to pay, the company filed a mechanics lien and sued him. A mechanics lien is a legal claim against a property for unpaid work. Anyone who works on your home, think plumber, electrician, handyman, can file this kind of lien if they haven't been paid. Craig couldn't believe it. He had been clear that any work be approved and paid for by his insurance.

6:17The first thing that came to my mind is what type of business are these people really running? What operation, what is their ethics, their business practices? Leans are sometimes necessary. When reputable plumbers and electricians sometimes do the work and don't get paid, leans are a legitimate way to get a homeowner to pay up. But leans can also be used to exert legal pressure after disasters when victims are overwhelmed and vulnerable. It would turn out Craig wasn't alone. In his neighborhood, about a dozen others got similar pitches, inflated bills, and liens. One neighbor got a bill of more than$100 ,000.

6:58Many were sued when they refused to pay. Gosh, it sounds like they just went up and down the block and got as many homeowners as they could. That's exactly right. I reached out to the franchise One Silver Serve, and they declined to comment. I also reached out to the national company Surf Pro to ask about Craig's case and those of his neighbors. They also said they weren't able to comment because of the pending litigation. And like you said, Navina, cases like Craig's are not uncommon. Niamhbi Tillman is with the National Insurance Crime Bureau, an organization that tracks contractor scams in addition to other types of fraud.

7:31She was also with the FBI's Dallas Bureau for a long time. We've seen just about every disaster there has been. Niamh B says scammers often thrive after disasters because the usual safeguards may not be present. People are desperate. They want things fixed fast. And there may be a shortage of qualified contractors in the area. For the majority of us, we think the best of people and we want to believe that people are there to help us. We underestimate, unfortunately, that others do not necessarily have our best interests at heart. When fraud is baked into recovery costs, it also ripples outward.

8:06Premiums rise, insurers pull back from high-risk areas, and fewer people can afford coverage. Niyambi said there are a few different ways homeowners can protect themselves. First, they should always get multiple bids and insist on a detailed, written scope of work and cost estimates before signing contracts. Take the time to verify any communications that you're getting from your insurance company or from a contractor. She says nefarious actors will often create websites or email addresses that look very close to what people are expecting to see from their insurance carrier. Niamhbi also recommends checking if the contractor is known to their insurance company and that they've been approved.

8:48Finally, she says, use the rescission window. That's a legal right that homeowners have. In many states, contracts signed during a door-to-door interaction have a short cooling-off period. Homeowners can rescind the contract within three to seven days depending on the state they're in. Do not succumb to the pressure of the people who are coming door to door. The old adage of if it's too good, if it sounds too good to be true, then it probably is, applies here as well when we're talking about dealing with the contractors. Niamhbi also recommends getting together with neighbors and developing a list of trusted contractors before a disaster strikes.

9:25Meanwhile, Craig Crosby's fight is still ongoing in Ventura County. I first wrote about his case for Grist earlier this year, and a day after the story was published, one silver serve rescinded the lien and dropped their lawsuit against him. Interesting timeline. Craig is still pursuing his counterclaims for fraud, breach of contract, property damage, and elder abuse. Some of the liens on lawsuits against his neighbors are also still outstanding. It's unclear how and when those will be resolved. Divina, thank you for bringing us this story. Maybe you can come back when there's more developments.

10:00Thank you so much for having me. I'd love to. This episode was produced by Julia Ritchie with engineering by Robert Rodriguez. It was fact-checked by Corey Bridges. Kicking Cannon is our show's editor, and The Indicator is a production of NPR.