A Perfect Storm for Fraud
California’s wildfire season has reached catastrophic levels, with the Palisades and Eaton fires destroying over 15,000 structures and leaving 62,000 more at risk. The federal government has deployed billions in emergency aid to assist survivors, but with every disaster comes a secondary crisis: fraud.
Disaster relief funds are a prime target for criminals, and the 2025 California wildfires are no exception. When money needs to move fast, oversight often lags behind, giving fraudsters an opening to exploit gaps in FEMA, HUD’s Community Development Block Grant–Disaster Recovery (CDBG-DR), and the Small Business Administration (SBA).
Three Main Fraud Schemes Agencies Need to Look Out For
1. Impersonation Fraud: Becoming Someone Else To Steal Aid
- Identity Theft – Criminals use stolen Social Security numbers and personal details to apply for FEMA and HUD benefits under fake identities. Many victims only realize they’ve been scammed when their legitimate aid applications are denied.
- Fake Government Officials – Scammers impersonate FEMA or SBA representatives, calling, texting, or even showing up in person to trick survivors into handing over personal information—or worse, demanding fake "processing fees" for assistance.
- Posing as Family Members – Some fraudsters have even pretended to be victims’ relatives to claim relief money, using excuses like "I look younger because of Botox" when caught.
2. Duplication of Benefits Fraud: Taking More Than Their Share
Federal law prohibits disaster victims from receiving duplicate aid for the same damages. However, fraudsters exploit the lack of real-time data sharing between federal programs to apply for FEMA, SBA, and HUD disaster grants simultaneously.
- Some people collect assistance multiple times using different variations of their name and address.
- Others file multiple applications across different counties and states where they have no property.
- Criminals coach survivors on how to "double dip" by applying for aid under different program names.
3. Contractor & Vendor Fraud: Taking the Money and Running
After disasters, a flood of fraudulent contractors swoops in, preying on desperate homeowners.
- Fake Contractors – They collect upfront payments for repairs and then disappear, leaving homeowners stranded.
- Shell Companies – Some fraudsters set up bogus businesses overnight to win lucrative rebuilding contracts—without any intention of completing the work.
- Kickback Schemes – Corrupt officials steer contracts to insiders in exchange for bribes, draining funds meant for legitimate disaster relief.
TrackLight: Exposing Fraud
At TrackLight, we don’t just detect fraud—we stop it before funds are lost. Our AI-powered fraud detection platform combines Large Language Models (LLMs), Social Network Analysis (SNA), and risk-based due diligence to identify fraud patterns in real time.
- LLM-Powered Data Matching – We scan FEMA, HUD, and SBA applications for duplicate claims, exposing fraud rings exploiting multiple relief programs.
- Social Network Analysis (SNA) – Our tools map connections between shell companies, fraudulent contractors, and high-risk vendors, revealing conflicts of interest and corruption.
- Real-Time Fraud Alerts – We flag suspicious applicants, fake businesses, and duplicate claims before funds are disbursed, saving taxpayer dollars.
Using Technology to Stop Fraud
Disaster fraud is a solvable problem, but agencies must leverage technology to stay ahead of fraud schemes. We need:
- Better Identity Verification – Cross-checking applications in real time can block fraudulent claims before money is lost.
- AI-Driven Fraud Detection – Advanced analytics can uncover complex fraud schemes too sophisticated for manual reviews.
- Stronger Data Sharing Across Agencies – FEMA, HUD, and SBA must collaborate to prevent duplication of benefits fraud.
- Proactive Vendor Screening – Preventing fraud in rebuilding contracts starts with better background checks on contractors.
Fraud doesn’t stop. Neither do we.
At TrackLight, we’re helping government agencies protect billions in disaster relief funding by stopping fraud before it starts.