Prices for gasoline, hotel rooms, electrical generators and other post-storm necessities have risen sharply from New York to West Virginia in the wake of Hurricane Sandy, and many residents are complaining of gouging.
In New Jersey alone, about 100 consumers have called the attorney general’s office to complain, said Neal Buccino, spokesman for the state’s Division of Consumer Affairs.
Here we explore what you should do if you suspect price gouging or other scams in the wake of Hurricane Sandy.
I suspect price gouging. Who do I contact?
New Jersey law establishes that during a State of Emergency (or 30 days after it has been lifted) excessive price increases are illegal. An excessive” price increase is defined as 10 percent higher than the price before the emergency. Incidents of price gouging can be reported to the Office of Consumer Protection at 1-800-242-5846.
What other schemes should I be aware of?
Disaster victims may fall behind in their credit payments or overextend themselves to the point that they must choose whether to pay creditors or obtain necessities. Such consumers are often approached by finance companies promising to consolidate homeowner’s debt for existing mortgage, credit card debt, car loans and repair loans. They then pressure the homeowner to sign multiple agreements without sufficient time to review or consult with anyone.
Problems associated with refinancing schemes include high processing fees, payments to bogus/phantom creditors and default on the loan. The homeowner often cannot pay both the refinancing costs and basic living expenses, resulting in a situation far worse than before the refinancing.
Foreclosure Consultants/Equity Purchasers
Some financial predators prey on persons during the foreclosure process. They claim to be foreclosure experts who offer to assist homeowners after they receive a notice of default. These financial thieves further encumber the property with liens for fees and extravagant charges, and try to obtain title through a power of attorney or by direct transfer. They may take advantage of the homeowner’s distress and offer to purchase the home for below market value through misrepresentations on the value of the home and on encumbrances.
These predators also may represent to the homeowners that they may stay in the property for the rest of their lives. In fact, after they obtain the property, they sell it and the new owner serves the tenants with eviction papers.
Home Repair Services Providers
Before contracting for any services, attempt to verify the legitimacy and trustworthiness of any service provider, including:
1. Use licensed home repair service providers, if applicable.
2. Demand proof of insurance, and making sure the contractor carries general liability insurance and workers’ compensation. If the contractor is not insured, you may be liable for accidents that occur on the property, including injuries to the contractor’s workers.
3. Check references. Contractors should be willing to provide the names of previous customers. Call several former customers who had similar work done. Also, call the Consumer Assistance Program (1-800-649-2424) and/or contact the Better Business Bureau (508-652-4800) to inquire about a business, and read user reviews on internet sites like “Front Porch Forum,” Google or Yahoo reviews, or Angie’s List.
4. Get a written estimate or each particular task to be performed. Compare services and prices before making a final decision. Also, read the fine print.
Some contractors charge a fee for a written estimate, which is often applied to the price of subsequent repairs. Do not sign any contracts for major repairs until your insurance representative has determined how much damage there is and how much the company will pay.
5. Insist on a written contract that clearly states all tasks to be performed, all associated costs and the payment schedule, and who will apply for the necessary permits or licenses. Never sign a blank contract or one with blank spaces. Have a lawyer review the contract if substantial costs are involved, and keep a copy for your records.
6. Any guarantees made by the contractor should be written into the contract. The guarantee should clearly state what is guaranteed, who is responsible for the guarantee and how long the guarantee is valid.
7. Obtain a local building permit if required. Contact your local government for permit information.
8. Make final payments only when work is completed. Pay by check. A reasonable down payment is 30 percent of the total cost, to be paid upon initial delivery of materials.
9. Canceling a contract should be done within 3 business days of signing. Follow the procedures for cancellation in the contract. Send the notification by registered mail with a return receipt to be signed by the contractor.
10. Things to watch out for:
- Be especially alert for phone or door-to-door solicitors who hand out flyers and promise to speed up the insurance or building permit process, and those who ask for large cash deposits or advance payments in full.
- Be wary of anyone claiming to be “FEMA certified,” because FEMA does not certify or endorse any contractor.
11. Call the Consumer Assistance Program at 1-800-649-2424 if you suspect a scam.