A CPA playbook to help prevent disaster fraud

When disaster strikes, the damage can extend far beyond destroyed property and disrupted lives. The calamity, whether natural or manmade, often leaves people vulnerable, desperate for help, and under pressure to make quick decisions. Fraudsters understand this environment and move quickly to exploit it.  

            According to a 2025 survey conducted by The Harris Poll on behalf of the AICPA, 37% of Americans have experienced financial fraud after a natural disaster. A year earlier, the FBI Internet Crime Complaint Center received more than 4,500 complaints, representing an estimated $96 million in losses from fraudulent charities and disaster relief campaigns.

For CPAs, disaster fraud presents both a challenge and an opportunity.

Clients frequently turn to trusted advisers for guidance during difficult moments, and accountants can play a critical role in helping individuals and businesses recognize fraud red flags and avoid becoming victims.

Disaster fraud is rapidly evolving. Technology, most notably social media and artificial intelligence (AI), is giving criminals new tools to impersonate legitimate organizations, steal identities, and exploit the generosity of people seeking to provide aid to victims.  

“We’re in an era now where you simply cannot trust everything you see or hear,” said Howard Silverstone, CPA/CFF, former executive vice president at J.S. Held, a global consulting firm.

Technology may enable modern scams, but the underlying tactics rely on human behavior. Fraudsters often exploit several psychological factors that are especially strong during disasters:

• Fear and urgency.
• Desire for comfort or reassurance.
• Compassion for victims.

When people face a scarcity of resources and feel pressure to act quickly, they are less likely to verify information or question suspicious requests. Simply slowing down and verifying information can stymie many scams. (Also see “Dealing With Natural Disasters: How to Avoid Fraudulent Activities,” JofA, July 28, 2025.)

“Disasters create an atmosphere of fear, and when we are afraid, we tend to glom onto something to fix it,” said Elizabeth Woodward, CPA/CFF, forensic accounting director and Lexington, Ky.-market leader with accounting and advisory firm Dean Dorton and a member of the AICPA’s FVS Executive Committee . “We don’t take the time to check things out and verify.”

Although the average person would never consider taking advantage of a disaster scenario, it’s important to realize outliers will commit fraud when the opportunity arises. 

DISASTER FRAUD IS UNIQUE

Many types of fraud target a specific group, such as elderly individuals, businesses, or investors. Disaster fraud is different because it targets two distinct groups simultaneously: people directly affected by the disaster and people who want to help by donating or offering assistance.

This dual targeting makes disaster fraud particularly widespread. Fraudsters may approach someone whose home was damaged and promise quick repairs, or they may solicit donations from well-meaning individuals, near and far, who want to support recovery efforts.

Both groups are vulnerable for different reasons. Victims of disasters often deal with shock, stress, and urgent needs. Donors, meanwhile, may act quickly out of compassion without verifying the legitimacy of a charity or fundraising campaign. Under those conditions, disaster fraud spreads quickly after major events.

MOST COMMON TYPES OF DISASTER FRAUD

While techniques evolve, most disaster fraud falls into four primary categories:

Charity fraud

After a major event, criminals create fake charities or impersonate legitimate organizations to collect donations, according to the FBI.

Scammers often rely on emotional appeals and urgent messaging. Emails, text messages, or social media posts may claim that victims need immediate help and encourage people to donate quickly.

In some cases, fraudsters create convincing websites or fundraising pages that appear legitimate. They may even use social media posts claiming that a specific individual lost their home and needs help, linking to donation platforms such as crowdfunding sites.

These scams can spread rapidly online, especially when posts are shared by people who believe the story is genuine.

Silverstone and Woodward recommend asking clients considering donations to:

• Verify charities through independent databases such as Candid (GuideStar) and CharityWatch before donating.
• Avoid clicking donation links in unsolicited emails or texts.
• Donate directly through the charity’s official website.
• Request a receipt for tax purposes.

Contractor fraud

Demand for repair services skyrockets when disasters damage homes and businesses. When there are fewer contractors available than damaged properties, homeowners may rush to secure services before verifying credentials.

For example, following Hurricane Ian in 2022, Florida investigators reported numerous cases involving roofing contractors who collected insurance proceeds or large deposits from homeowners and then either abandoned projects or performed only minimal work. The National Insurance Crime Bureau (NICB) also identified a 38% increase in contractor fraud from 2023 to 2025.

According to Silverstone and Woodward, fraudulent contractors may go door-to-door offering immediate repairs. They often ask for large payments upfront and then perform poor-quality work or disappear entirely after taking a deposit. Even legitimate contractors can become problematic if payment structures are poorly defined. Fraudsters may also impersonate Federal Emergency Management Agency (FEMA) housing inspectors following a natural disaster.

Silverstone and Woodward recommend advising clients to:

• Verify contractor licenses, insurance, and bonding.
• Obtain multiple estimates before commiting to repairs.
• Avoid paying contractors in full upfront.
• Use escrow accounts or performance-based payment plans when possible.
• Have an attorney review contracts before you sign them.

Insurance fraud

Some fraudsters impersonate insurance representatives and contact disaster victims offering assistance with claims, according to Silverstone and Woodward.

More sophisticated schemes involve fraudsters filing fraudulent claims using stolen personal information. 

Silverstone and Woodward recommend CPAs advise clients to:

• Always confirm the identity of insurance representatives.
• Call insurance companies using official numbers rather than returning unsolicited calls.
• Review all claim documentation carefully.
• Consult a trusted adviser before signing unfamiliar forms.

Identity theft

After disasters, fraudsters are increasingly obtaining personal information from compromised systems, public records, or phishing schemes, according to Silverstone and Woodward. They can then use that information to file fraudulent government assistance claims or access financial accounts.

Fraud involving disaster-assistance programs surged during the COVID-19 pandemic, when criminals filed thousands of false claims for relief funds using stolen identities.  

In disaster recovery situations, similar schemes can occur with government aid programs. Victims may not realize their identity has been used until they attempt to apply for assistance themselves.

Silverstone and Woodward suggest CPAs advise clients to:

• Never provide personal information through unsolicited phone calls or emails.
• Be cautious about clicking links in text messages.
• Consider placing a credit freeze with credit bureaus.
• Monitor credit reports regularly.

EMERGING FRAUD TRENDS

Although the core tactics of fraud remain consistent, technology is making scams more convincing and more difficult to detect. The technologies include:

AI and deepfakes

AI has made it easier than ever for criminals to impersonate legitimate organizations and individuals.

Fraudsters can now generate convincing deepfakes, meaning a video, image, or audio recording created or altered using AI to impersonate individuals and misrepresent events. These technologies allow them to mimic the voice of a bank employee, insurance agent, or even a family member (also see, “How CPAs Can Combat the Rising Threat of Deepfake Fraud,” JofA, May 1, 2025).

In disaster situations, AI-generated messages may claim to be from government agencies offering assistance or requesting verification of personal information.

The increasing sophistication of these technologies means that victims cannot rely solely on how convincing a message sounds or looks. Independent verification is becoming more important than ever.

Social media fundraising scams

Social media platforms have become a powerful tool for disaster fundraising, but they also provide opportunities for fraud.

AI-generated images and deepfake videos could make these scams even harder to detect in the future.

Before donating, individuals should confirm the authenticity of both the fundraiser and the organization involved.

Phishing and ‘happy clickers’

People now receive disaster-related messages through email, text messages, and social media alerts. Fraudsters exploit this environment by sending phishing messages designed to trick recipients into clicking malicious links.

Some individuals quickly click links without verifying their source, a behavior sometimes referred to as being a “happy clicker.” Once victims click the link, they may unknowingly provide login credentials, financial information, or other sensitive data, or download malware.

Education about phishing tactics can help clients stay safe.

EDUCATING CLIENTS ABOUT DISASTER FRAUD PREVENTION

Disaster fraud will not disappear. As technology advances and communication becomes more digital, scammers will continue to find new ways to exploit vulnerable situations.

By helping clients recognize and avoid fraud, accountants can help to ensure recovery efforts are not complicated by financial exploitation. And the earlier you start planning, the better.

Silverstone and Woodward recommend the following strategies:

• Encourage a disaster preparedness plan. Clients should keep important financial documents in a secure location and maintain digital backups when possible. Cloud storage systems can ensure documents remain accessible even if physical copies are destroyed. Key documents to store securely include:
  • Tax returns.
  • Insurance policies.
  • Identification documents.
  • Property records.
  • Financial account information.

Maintaining an emergency contact list, including attorneys, insurance agents, bankers, and accountants, can also streamline recovery efforts.

• Promote verification and skepticism. Clients should independently verify the identity of anyone requesting information or payment. For example:
  • Call organizations using official phone numbers.
  • Visit websites directly rather than clicking emailed links.Confirm contractor credentials through licensing boards.
  • Take photos or videos of the contractors and any documents they ask you to sign.
• Advise against cash payments. Encourage clients to use payment methods that create a record, such as checks or electronic payments. Once cash changes hands, there is little recourse if the contractor disappears.
• Recommend professional review of contracts. Encourage clients to have major agreements reviewed by trusted attorneys and insurance professionals before signing.
• Encourage open communication. Prompt reporting increases the chances of recovering funds or stopping ongoing scams. CPAs can help by fostering a supportive environment and encouraging clients to speak up quickly if they suspect fraud.
  
  “I think it’s important to not sound judgmental, but to be mindful of the situation and how you can help,” Woodward said.
• Be a community educator. Community outreach efforts, such as workshops or seminars, can help educate residents about common scams and protective measures. Partnering with local governments, professional associations, or nonprofit organizations can expand the reach of these programs.

If fraud is suspected, it should be reported to appropriate authorities such as the FEMA disaster fraud hotline or the Federal Trade Commission’s ReportFraud.ftc.gov website. Visit the AICPA Disaster Relief Resource Center for more tools and information.

---

About the author

Hannah Pitstick is a content writer with the JofA. To comment on this article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.

---

MEMBER RESOURCES

Engage365 communities

AICPA Forensic and Valuation Services

Stay updated on what’s happening in the FVS community in real time on Engage365. Exchange ideas, ask questions, and collaborate with peers facing similar challenges in the forensic accounting and business valuation fields. From unfiltered discussions to live debates and resource sharing, communities are a place for member connections.