Scary Insurance Scams and Frauds to Watch Out For
This Halloween season, don’t be spooked if you find your inbox full of suspicious links, letters, phone calls, and more—attempts to steal your money and personal information. While navigating scams, fraud, and hackers can be scary, we’re here to help you identify some potential ways they might target you.
While many scams are digital these days, some come in the form of physical letters in the mail, and others are real people, calling you on the phone or knocking on your door—not for treats, but to trick you into thinking they’re a trustworthy contractor.
Before you wind up getting your bank account drained by a vampiric fraudster, let’s learn about some common types of insurance-related scams and how to deal with them.
- Roof Repair Scam
It’s hurricane season in the eastern US, which means many of us are worried about damage to our homes and businesses. In the wake of such storms, you may encounter roof repair scams. If someone comes to your door claiming to be a contractor who will fix your damaged roof, be sure to watch out for these warning signs:
- Asking for payment in advance
- Exaggerating the damage
- Asking to inspect your roof (they may do so to create more damage)
- Making lower offers than other contractors or claiming to offer a “hurricane special” deal
- Performing rushed, sub-par work
Never pay upfront for a roof repair, and don’t sign any contracts before doing your proper research. If your roof is damaged in a storm, you should start by calling your insurance agent. They’ll help you file a claim and get a real inspection performed. Then make sure you get more than one estimate from various contractors, especially ones trusted by your family or friends. Pay with a check or credit card—never in cash. And lastly, if you’re worried you’re getting scammed, contact your state’s insurance fraud bureau or the National Insurance Crime Bureau (NICB). Find the Insurance Fraud Bureau of Massachusetts (IFB) here.
2. Auto Accident Scams
Out of all insurance fraud, automobile fraud is by far the most common. There are many ways in which fraudsters can try to scam you out of money regarding your car insurance, such as:
- Staging accidents
- Faking injury reports
- Adding “jump-in” passengers (people who were not actually present) to a claim or accident report
- Exaggerating injury claims
- Falsely reporting car theft
- Purposefully damaging their vehicle after an accident
- Filing claims for pre-existing vehicle damage
Oftentimes, these sorts of scams arise when you get into a car accident and exchange insurance information with the other driver, but there are no witnesses or police present. You may find out later from your insurance provider about these false claims filed by the other party, in hopes that they will get a settlement.
Because it boils down to your word against theirs, it’s best practice to collect as much information as you can after getting into an accident—take photos, get a head count, collect the names and contact info of the driver and their passengers. Ask for the names and contact info of any witnesses that may have seen the accident, too. Lastly, you can file a police report right away with all the information you’ve gathered.
Car insurance companies typically employ investigative units to deal with fraudulent claims like these. If you think you’re getting scammed, talk to your insurance claims adjuster.
3. Tow Truck Scams
You might be surprised by how frequently people are scammed by predatory tow truck companies. There are thousands of reported complaints every year related to roadside assistance fraud.
Types of roadside assistance scams include:
- Unreasonably high fees
- Improper towing of vehicles
- Holding vehicles hostage for payment
- Non-consensual towing
Oftentimes, a predatory tow truck service will show up at a scene without you having called them. They may provide low price quotes, and then once they tow your vehicle, they charge you extremely high fees, threatening to impound the car if you don’t pay.
Another scenario is known as “phantom towing.” In this case, a tow truck illegally tows your car from its legal parking spot, holds it hostage, and demands exorbitant fees. These types of scammers target parking areas in which the vehicle owner may question if they parked illegally by mistake, so that the scam is believable.
In addition, tow truck scammers may try to surprise you with pricey fees for things like “storage,” “cleaning,” or “wait time,” even if you didn’t ask for nor approve these services. In some cases, the services weren’t even provided. This results in drivers paying much more than they were originally quoted.
Be careful if you’re ever stuck on the side of the road and a tow truck shows up without your request. They may pressure you into paying them before you have a chance to call another company. They might even pretend to be the towing company that you called. If you feel pressured or skeptical, decline their offer and try calling a different another company.
If you’ve been the victim of a tow truck scam, file a complaint with an organization like the Better Business Bureau, report the incident to the police, contact your state Attorney General’s office to file a consumer complaint, dispute the charge with your bank or credit card company, and leave a negative online review. If possible, obtain an itemized invoice from the tow company to document the incident.
4. Phishing Scams
Insurance isn’t left out of the widespread epidemic of phishing scams that plague our inboxes. More than 4,000 ransomware attacks occur every day, according to the FBI. In 2020, Americans lost more than $54 million thanks to phishing.
Most often, phishing scams take the form of emails, text messages, phone calls, and direct messages on social media. They try to prey on your fear or anxiety—they might claim you have a package delayed because the shipper needs your personal information, or they might claim to be your bank requesting your password. Phishing scams can claim to be your insurance provider, too.
The best way to avoid getting caught in a phishing net is to never click any links or attachments you weren’t expecting to receive. Avoid answering phone calls from numbers that you normally don’t get calls from—and for important numbers like your insurance agent or insurance provider, put them in your contact book so you know who they really are. Never give someone your password or credit card info over the phone if a caller asks for it.
Oftentimes, phishing scams look very similar to companies you trust. They may use a logo or an email address that looks like your bank or insurance provider. But you can always look up or save the correct email address of the company and compare it to the potential scammer.
Another good tip is to use multi-factor authentication for all of your accounts—you can set up facial recognition, touch ID, or a cell phone number with your account, so you receive a code to log in.
We hope these pointers will help you avoid all the tricks scammers may have up their sleeves. Stay safe this Halloween!