This report covers an evaluation of the Federal Emergency Management Agency’s post disaster fraud. FEMA came into place to deal with issues related to natural and manmade disasters in the US. Its major functions include, disaster preparedness sensitization, disaster prevention, responding to disasters, and helping victims recover from tragedies(Federal Emergency Management Agency, 2015). Through the agency, the US government gives disaster relief assistance to the victims, which sometimes include financial compensation. FEMA has registered its agents, from different professions ranging from contractors, counsellors among others with the aim of assisting bona fide victims. FEMA compensates victims in areas hit by calamity whose destroyed properties lack an insurance cover. The victims provide basic personal data for registration and verification where they prove that the property destroyed were their legal possessions.
However, there have been reports of fraud cases where ill motived people want to benefit from occurrences of calamities. As mentioned earlier, only individuals and businesses affected directly by catastrophe should make claims for compensation, and only registered agents should work in the name of FEMA.
Examples of post disaster frauds
Fraud related to false claims
People submit false and fraudulent claims when there are occurrences of catastrophes. They do this with the aim of getting compensation even though the tragedies did not affect them in any way. They sometimes get payment, which otherwise they would not be entitled. A case in point, during the time Hurricane Sandy hit America, FBI in collaboration with FEMA arrested four people for making false claims and consequently, receiving benefits not entitled to them(Federal Bureau of Investigation, 2014).
Fraud related to price gouging
Bona fide victims, entitled to compensation, sometimes seek to extort more from the availed funds by quoting values higher than the actual values of property damaged by disasters. Eventually, victims end up getting more compensation thus putting them in better positions than they were before occurrence of catastrophes.
Fraud related to charitable solicitations.
At time of tragedy, people of goodwill come together and contribute towards supporting those unfortunate to suffer loss. More often than not, charitable organizations take initiative of pooling funds from individuals with the aim of assisting the victims. Fraudsters have seen the immense donations made and come up with bogus charitable organizations, collect money in the name of helping victims but none of these funds reach the victims. For instance, authorities took down a website after it was found to be collecting funds for support of local fire fighters in Washington. After a thorough search it was found that the claims of giving food to fire fighters was not true and subsequently, a lot of money went unaccounted for (Satti, 2015).
Fraud related to illegitimate contractors and vendors
Taking money from victims of disaster is not only illegal but also extremely immoral. However, cases of con artists taking a lot of money from victim are reported. They take advantage of the confusion, disarrays, and fears that engulfs victims’ judgment during disasters. Home repair, business repair and damage clean-ups are major areas that the fraudulent vendors use to solicit money from the unsuspecting victims. These cons ask for payments upfront and upon receiving the money, they disappear.
Fraud related to forgery
Mostly, beneficiaries receive compensations in form of checks, which are prone to forgery relative to cash payment. Fakers either steal checks from the victims and sign them for cash or acquire them fraudulently.
FEMA Fraud Prevention Approaches
FEMA is a federal body that has the mandate to offer payment to victims of disasters. However, it has been observed that FEMA’s post disaster aid programs are prone to various forms of fraud, abuse, and resource wastage. While FEMA’s culture has always focused on providing help to survivors of disasters, the agency has however paid little attention to financial responsibility. This implies that FEMA lacks effective internal control and fraud prevention programs.
Notwithstanding long history of fraudulent activities noted in post disaster aid programs, the agency has not done much to improve its fraud prevention efforts while employees have failed to acknowledge that fraud prevention is a critical part of their roles and the agency in general.
Specifically, some factors associated with improper compensation include human error involving mistakes in data capturing by employees; fraud; mistakes associated with homeownership or ineligibility resulting from insurance; and lack of sufficient internal controls such as poor verification of documents submitted by survivors.
Regrettably, it has been observed that some employees of the agency have resisted changes to the program (US Department of Homeland Security, 2011). In most instances, these officials have argued that change would negatively affect their abilities to swiftly respond and offer help to survivors of disasters. This group of FEMA officials displays normal nature of human to resist change, especially if they are not consulted as key stakeholders. While it is imperative to acknowledge their point of view, the agency nevertheless must formulate and implement far-reaching policies and control mechanisms that would deter, curb, and lessen risks associated with inappropriate payments.
As such, FEMA has made some strides to prevent improper payments to fraudsters. In this regard, FEMA should conduct studies and adopt recommendations from other studies conducted by scholars in the field of fraud prevention to show its renewed efforts to curb fraud and reflect commitment to change. Hence, fraud prevention should be a critical component of the agency’s objective.
Meanwhile, the agency’s leadership must take bold, substantive and sustained initiatives show the relevance of financial responsibility and the integrity of FEMA.
FEMA requires a strong organizational ethical and cultural transformation while focusing on effective governance at the top to curb fraud. The agency cannot claim success if it continues to provide payments to fraudsters. It is necessary for FEMA to understand that efforts on the mission of assisting disaster survivors and financial accountability are generally exclusive. Hence, senior administrators and leadership should appreciate the relationship.
In attempts to curb fraud and renew its focus on the mission, FEMA must strive to communicate the message of financial accountability throughout the organization through a long-term, continuous effort. FEMA must also emphasize the necessity to prevent fraud at all levels. As such, training on fraud prevention is necessary, for instance, twice a year to equip employees with the right skills.
FEMA is also encouraged to share information with law enforcement agencies during disasters. In this regard, the agency should work with other related institutions to review data of potential fraudsters based on efficient protocol and processes. While the Privacy Act may limit data sharing and fraud investigation efforts, FEMA should follow the required procedures and obtain the necessary approvals to conduct fraud investigation. Such approaches can help the agency to detect all fraudulent payments and inappropriately disbursed cash.
While internal controls are necessary at the agency level, FEMA should continuously conduct post disaster education and awareness to warn survivors about fraudsters. In the recent past, for instance, FEMA has started to warn the public about fraudsters by emphasizing that its officials do not ask for or accept cash and always have their identification documents. Besides, FEMA stresses other related agencies and the state do not require any fees from disaster survivors to receive assistance. Still, unless disaster survivors place a call, the agency warns that they should not provide their personal financial information. At the same time, they must submit personal information via the phone to protect against identity theft (Federal Emergency Management Agency, 2015).
FEMA must appreciate that fraud prevention starts with the changes with its internal control measures. On this note, the agency must further improve and maintain effective internal control processes to “prevent inappropriate payments, deter, and detect fraud” (US Department of Homeland Security, 2011, p. 26). The agency has made some improvements in internal control processes, but some notable challenges have remained. For instance, the agency has not formulated internal control measures that meet the requirements of the statute. Hence, cases of abuse, waste, and fraud are still noted. FEMA officials have not been able to assess and govern internal control processes effectively. There could be lack of coordination across the entire agency.
FEMA now focuses on recovery efforts to recoup funds wrongly dispersed to fraudsters. However, its efforts have been rather slow while previous administrators did not establish a strong recoupment procedure or utterly failed to collect any payment. As such, several millions of dollars wrongfully disbursed to fraudsters remain uncollected.
Collection of debts is a legal obligation that FEMA must meet. However, the agency has not paid much attention to collection of debts. Currently, FEMA is seeking to recoup about $23 million that was wrongly paid to nearly 3,600 families or individuals (Mikle & Zimmer, 2014). It is also possible that several factors other than fraud contribute to improper payment. For instance, accounting errors, human or any other reasons have led to such wrong disbursement to persons who are not eligible. After audit, FEMA identified that 14.5% of payments were inappropriate payments to survivors of Hurricane Katrina.
Such abuse, waste, and fraud have led to calls for enhanced control and recoupment. FEMA should continue with the recovery process until recovery, deferral, termination, or transfer of outstanding amounts to the Department of the Treasury resolves cases of improper disbursement.
Fraudsters have always found unlikely opportunities to operate their fraud. One such opportunity, unfortunately, emanates from the most vulnerable individuals affected by disasters.
Unscrupulous individuals have often used post disaster fraud to receive improper payments from FEMA. While these schemes can differ, any major disaster presents an opportunity for despicable actors to get payments from FEMA and other supporting organizations. Disasters such as Hurricane Katrina, Hurricane Sandy, and Wildfire among others are just some instances.
FEMA warns the public against such nefarious people. The agency, however, should focus on its mission of assistance and ensuring financial responsibility. The current weak internal control processes need improvement. At the same time, FEMA should focus on promoting change while emphasizing that its officials also have the duty to prevent fraud and meet the needs of eligible survivors. Training involving fraud prevention is necessary to increase awareness to reduce improper payments to fraudsters.
Federal Bureau of Investigation. (2014). Four Arrested in FEMA Fraud Scheme. Web.
Federal Emergency Management Agency. (2015). About the Agency. Web.
Federal Emergency Management Agency. (2015). Survivors Cautioned to Beware of Frauds and Scams. Web.
Mikle, J., & Zimmer, R. (2014). Return the money! FEMA says to some Sandy victims. Web.
Satti, B. (2015). Disaster Fraud: Criminals Capitalizing on Catastrophes. Web.
US Department of Homeland Security. (2011). Assessment of FEMA’s Fraud Prevention Efforts. Washington, DC: Office of Inspector General.