Fraud troubles consumers in hard-hit areas

Fraud troubles consumers in hard-hit areas

May 24th, 2011 by Ellis Smith in Business Around the Region

Gary Cordell

Gary Cordell

Photo by Angela Lewis /Times Free Press.

The way a community responds to a disaster says a lot about its character, said Royce Cornelison, head of P&C Construction.

"This has been an opportunity for people to shine and not shine," he said.

In the Tennessee Valley, he's seen neighbors helping neighbors, strangers become friends and communities working together to assist those in need.

But news reports of a disaster invariably attract "a bad element: unscrupulous contractors," said Gary Cordell, director of the Tennessee Division of Consumer Affairs.

Cordell said he's received a number of complaints resulting from "stormchasers" and scam artists, and he's proactively traveling through the region to help homeowners avoid trouble.

The biggest no-no, he said, is paying any money up front.

In one common scenario, a faux contractor arrives at a residence and reports that he is willing to do a repair job at a discount because he has some surplus materials left over from another job. However, the contractor adds that he'll need some upfront money to buy the other supplies he needs to complete the job.

This is a scam.

"If somebody knocks on your door, just remember that a reputable contractor will already have more work than they can handle," Cordell said. "If there's ever been a time for the adage 'buyer beware,' it's now."

Residents should also beware the scammer hiding behind nice clothes and a fraudulent badge.

Con artists wearing Federal Emergency Management Agency or insurance adjuster badges will visit homes and try what's called a "phishing," scam, in an effort to gain personal information about a homeowner.

This information later can be used to access bank accounts, open lines of credit in a consumer's name or simply steal a person's identity, he said.

"A real FEMA official will not come to your house [after the immediate emergency is past], they'll be set up somewhere and you'll go to them," Cordell said.

Cordell, along with Jim Winsett, president and CEO of the Better Business Bureau of Chattanooga, have fielded numerous complaints but even more inquiries, which they say is a good thing.

"It's good when you have inquiries, because that keeps the actual scam activities very minimal," Winsett said.

Torch Award for Marketplace Ethics

Winners

  • BlueCross BlueShield of Tennessee

  • Habitat for Humanity

  • Kennedy, Coulter, Rushing & Watson

  • P&C Construction

  • Hamilton Plastics

  • Playcore

Runners-up

  • Chattanooga Area Food Bank

  • Rick's Lock & Key

Nominees

  • Honda of Cleveland

  • Praters Inc.

In order that residents may know "that their home contractors and charity relief efforts are legitimate and honorable," the BBB keeps track of complaints and helps mediate disputes when they arise.

The organization also hands out awards to those who go above and beyond the call of duty in its annual Torch Awards for Marketplace Ethics.

Cordell likened the winners' mindsets as the difference between returning a wallet to its rightful owner and removing a nail from a parking lot.

When he asked a group of college students if they would return the wallet they found in a parking lot, they all replied that they would. But when he asked them if they would pick up a rusty nail in that same parking lot, they "looked at me like I was from outer space," he said.

But what if "you have a young mother, she has two young children, and she backs up and runs over the nail," he asked. "About that time, she goes into labor - A number of things could happen, she could have an accident."

"It's one thing to pick up the wallet, but get to the level where you're picking up the nail," he said.

Contact Ellis Smith at esmith@timesfreepress.com or 423-757-6315.