Natural disasters are fertile grounds for restoration scams. Shocked and desperate homeowners are particularly susceptible to fast-talking con artists who promise immediate repairs and restoration.

The target of restoration scams tends to be older people who often have immediately available funds, are prone to be more trusting, are less likely to report a scam out of embarrassment and are seen as less reliable witnesses due to memory deterioration; this is the epitome of elder financial exploitation.

Warning Signs of a Scammer

There are a number of common characteristics that mark a potentially dishonest home restoration service, including so-called company representatives who:

• Walk door-to-door suggesting they are working on other homes in the area—reputable firms don’t need to ring doorbells to gain business
• Offer an attractive price because they have surplus materials, likely from a previous customer they overcharged or for whom they didn’t complete the job
• Hesitate or refuse to provide contact information or identification
• Pressure the homeowner for an immediate decision, usually suggesting that the cost estimate is a limited-time offer
• Only accept cash and ask that the homeowner pays all or a major share of the cost upfront; alternatively, they offer financing through a lender they know
• Are not licensed with the state; some states do not require licenses

Tips to Avoid Being Scammed

Individuals can protect themselves from these fraudsters by:

• Insisting on seeing references
• Seeking multiple bids
• Checking out a prospective restoration company with the Better Business Bureau (BBB)
• Making sure the restoration contractor is licensed, bonded and insured for general liability and workers’ compensation
• Asking if they are certified by the Inspection Institute of Cleaning and Restoration Certification
• Getting a written contract before any payment is made and work is started
• Focusing on the fine print, including description of work, cost of materials, start and finish dates, and warranty information
• Not paying in cash
• Not making a big deposit. (33% is typical.)
• Remembering the lowest bid is not always the best choice
• Arranging financing on their own, not through the contractor

Damage from floods, storms or fires is a personal tragedy that is too often compounded by financial tragedy, thanks to scammers coming out of the woodwork in the aftermath of destructive events.

As a financial advisor, you should consider how you can help your clients make a smart financial decision during the difficult moments that follow a natural disaster.

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