TDCI Cautions Investors to Watch for Scams in Wake of Hurricane Harvey

Thursday, August 31, 2017 | 12:54pm

NASHVILLE – In the wake of widespread damage caused by Hurricane and Tropical Storm Harvey in Texas, the Tennessee Department of Commerce & Insurance’s (TDCI) Securities Division is cautioning investors to watch out for opportunistic investment scams.

“As we are seeing in Texas, natural disasters bring out the best in people, with neighbors helping neighbors. Unfortunately, we know from experience that disasters can also bring out the worst in people, particularly those seeking to profit from the misfortune of others,” said TDCI Assistant Commissioner for Securities Frank Borger-Gilligan. “Unsolicited investment offers seeking to capitalize on the aftermath of Hurricane Harvey should be approached with extreme caution.”

TDCI urges investors to watch for red flags of hurricane-related scams, including unsolicited email, social media messages, crowdfunding pitches or telephone calls promoting investment pools or bonds to help storm victims, water-removal or purification technologies, electricity-generating devices and distressed real estate remediation programs.

Scam artists also may linger to prey on storm victims who anticipate receiving large lump-sum insurance settlements. “The potential for fraud remains even after the skies have cleared. Be wary of any promoter promising quick and high returns on your investments,” Borger-Gilligan said.

TDCI also cautions about fraudulent charitable solicitations that prey on the goodness of people seeking to help those in need. “The best advice is to do your research. Give to those charitable organizations that are registered properly with state authorities. As with any charitable contribution, those who want to contribute to relief efforts should send contributions to only those charities with an established track record of making sure the donations get to the victims,” Borger-Gilligan added.

TDCI offers the following tips to help Tennesseans avoid disaster-related scams:

Investor Scams

  • Delete unsolicited emails or social media messages and hang up on aggressive cold callers promoting hurricane-related investments, especially those from small companies touting unproven or new technologies or products.
  • Use common sense. Claims of guaranteed returns or low/no investment risk are classic red flags. Every investment involves some degree of risk.
  • Do your homework. Contact the TDCI Securities Division to check that both the seller and investment are licensed and registered. If not, they may be operating illegally. The Securities Division can be reached at 615-741-2947 or via our website.
  • If you suspect that you might be a victim of securities or insurance fraud, or if you would like to file a complaint or speak with an investigator, please contact the Tennessee Securities Division – Financial Services Investigations Unit at (615) 741-5900. To file a complaint online, visit /commerce/article/securities-file-a-complaint.

Donation Scams

  • Avoid paying in cash or by wire transfer. These payment options give you little to no fraud protection.
  • When texting to donate, confirm the number with the source before you donate. The charge will show up on your mobile phone bill, but donations are not immediate.
  • Don’t assume that charity messages posted on social media are legitimate. Research the organization yourself.
  • Be cautious of look-alike websites. These fraudulent websites will often ask for personal or financial information over an unsecure connection or may download harmful malware into your computer. Look for a padlock symbol or “https” before the web address indicating that it is secure.
  • Find out what percentage of your donation will go to the charity and whether you will be charged any fees for making a donation through the fundraising platform website.
  • If purchasing merchandise from a business claiming that the proceeds will go towards a charity or fund, look into the company and ensure they are a trustworthy business.
  • Not all crowdfunding campaigns are set up with good intentions. If you’re not sure where the funds will go when the campaign is over, look for an alternative way to donate.
  • If you have been contacted by or fallen victim to a charity scam, report it to the Federal Trade Commission online at and to your bank or credit card company if applicable.