Flash flooding in Texas, which started on Wednesday and has killed at least 80 people, spawned fraud schemes and scams that attempted to exploit the goodwill and charitable instincts of onlookers.
In one instance, the Center Point Volunteer Fire Department, located in hard-hit Kerr County, had its Venmo donation account temporarily suspended after creating it on Saturday. Fraudsters created fake accounts using similar usernames and the department's logos. The fire department said Venmo has
The flash flooding in Texas — one of the most deadly flood events in the U.S. in recent years — is just one of many examples of a natural disaster leading to a surge in fraud and scams.
Such crime is so common that the Department of Justice has a dedicated office for handling it: the National Center for Disaster Fraud, or NCDF. The center operates a partnership with FEMA, established in the wake of Hurricane Katrina.
Why disasters inspire fraud and scams
Criminals seek out targets in the wake of natural disasters to prey on vulnerability, exhaustion, fear and stress.
"People are particularly prone to falling for these scams during a disaster situation because it's traumatic," said Scott Anchin, senior vice president of strategic initiatives and policy at Independent Community Bankers Association, or ICBA, in
"People's guards are down," Anchin said. "It's the time when people are least expecting to be taken advantage of."
Criminals engaging in charity scams often pressure victims to send cash, gift cards or cryptocurrency, or to make wire transfers — funds that are difficult to recover once sent,
Proactive communication is key
Banks — especially community banks and credit unions — are often trusted sources of information for their customers in the wake of disasters, providing information about federal aid, payment deferrals and scam prevention.
To protect the communities they serve, this communication should be proactive — warning about the common signs of fraud and scams before disaster strikes through regular email alerts, social media posts and messaging on online banking websites.
"We're trying to keep [our fraud education] out there and in front of our customers," Margi Fleming, senior vice president of human resources, branch administration and marketing at Citizens Bank in Olanta, South Carolina, told the ICBA.
Proper reporting channels for banks
When a bank identifies a disaster fraud scheme or believes its customers have been targeted, timely reporting is crucial to shutting down the operation.
Filing a Suspicious Activity Report, or SAR, with Fincen is typically the first step for contacting law enforcement after a bank has identified such a scheme. However, Fincen has advised in the past that financial institutions may also report suspicious activity to other federal agencies.
For disaster-related fraud, the NCDF offers both a hotline and an online disaster complaint form. The NCDF also provides guidance about reporting misconduct to other agencies, depending on the specific type of fraud. This can include the FBI's Internet Crime Complaint Center, or IC3, the Department of Homeland Security's OIG or state attorneys general.
Common fraud tactics in disaster aftermath
Beyond general scam tactics, criminals adapt their methods following disasters in a few ways,
- Charity fraud: Fraudsters often create fake charities, sometimes with names similar to reputable organizations, collecting donations that never reach relief efforts.
- Contractor and repair scams: Fraudulent contractors offer low-cost repairs but deliver shoddy work or disappear after upfront payments.
- Impersonation of government officials: Scammers pose as FEMA, Small Business Administration, Housing and Urban Development, or other federal or local disaster workers, asking for money, banking information, or charging for services that are free. They can also spoof official phone numbers when making calls to potential victims.
- Impersonating insurance adjusters: Fraudsters may impersonate insurance adjusters, offering immediate cash for a policy payout in exchange for personal information or supposed processing fees.
- Mortgage and rental scams: Fraudsters offer homeowners assistance with negotiating or delaying mortgage payments for a fee, or post fake rental property ads to collect deposits.
