Hurricanes Gustav and Ike Disaster Assistance:

FEMA Strengthened Its Fraud Prevention Controls, but Customer Service Needs Improvement

GAO-09-671: Published: Jun 19, 2009. Publicly Released: Jun 19, 2009.

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GAO's previous work on Hurricanes Katrina and Rita identified fraud, waste, and abuse resulting from a lack of fraud-prevention controls within the Federal Emergency Management Agency's (FEMA) assistance programs. For example, FEMA did not verify the identities or addresses of individuals applying for aid under its Individuals and Households Program (IHP). FEMA also did not verify the eligibility of individuals seeking shelter in FEMA-paid-for hotels and made duplicate payments to individuals who applied multiple times. GAO made numerous recommendations designed to improve these controls. To follow up on this work, GAO conducted undercover tests of the IHP process during the response to Hurricanes Gustav and Ike. This report discusses (1) whether FEMA's controls have improved since Katrina and Rita and (2) issues GAO identified related to the customer service that FEMA provided. GAO submitted bogus applications for disaster assistance, met with FEMA officials, and contacted actual disaster victims to determine their experiences applying for aid.

FEMA has significantly improved its fraud prevention controls over disaster assistance. For example, FEMA now conducts identity and address verification on all applications and requires inspections prior to approving rental assistance. In addition, FEMA requires individuals in need of housing assistance to provide valid registration numbers before checking into FEMA-paid-for hotels. FEMA has also taken steps to flag and cancel duplicate registrations for the same disaster. These improvements made it more difficult for GAO to penetrate IHP controls for Hurricanes Gustav and Ike--only 1 of 10 fraudulent applications submitted by GAO received cash payments. However, GAO found flaws in FEMA's controls that still leave the government vulnerable to fraud, waste, and abuse. GAO's undercover tests show that a persistent fraudster can bypass many of these controls by submitting fabricated documents to prove identity or address and, as a result, obtain housing assistance. GAO also received duplicate payments for bogus hotel expenses. In addition, FEMA failed to properly inspect a bogus address GAO used to apply for assistance, ultimately sending GAO multiple checks for thousands of dollars in rental assistance. GAO observed several problems with FEMA's customer service, which made it difficult for many real victims to apply for assistance or obtain shelter in a timely fashion. For example, one of GAO's investigators called nine times over the course of 3 days--several times being put on hold for 20 minutes----before being connected to an operator. Other investigators received incorrect information about the application process. Actual disaster victims confirmed these problems. One applicant reported having to call FEMA at 4 a.m. in order to reach an operator. FEMA cited several factors that contributed to this poor service, including a higher-than-expected call volume and an inability to meet projected call center staffing needs because a contractor failed to provide adequate staffing. Despite these issues, FEMA told GAO that it has made few changes in preparation for the 2009 hurricane season.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Between December 2009 and March 2011, and consistent with the intent of our recommendation, FEMA staff tested random samples of cases, and from these case samples, FEMA staff verified caseworker compliance and the legitimacy of documents submitted by actual applicants. FEMA has taken steps to improve the controls under its IHP by randomly reviewing and verifying the legitimacy of the supporting documentation that caseworkers accept from applicants under the Individuals and Households Program (IHP). These steps should improve FEMA's efforts in ensuring that IHP applications and supporting documentation are accurate and legitimate, so that housing assistance is not obtained through fraudulent means.

    Recommendation: The Secretary of Homeland Security should direct the Administrator of FEMA to establish random checks to assess the validity of supporting documentation submitted by applicants to verify identity and address.

    Agency Affected: Department of Homeland Security

  2. Status: Closed - Implemented

    Comments: In July 2012, and in response to our findings and recommendation, FEMA stated that although it had initially indicated that it would work to improve contractor readiness, its analysis of past disaster activity has indicated that contractors may not be the best option for surge events. Specifically, FEMA stated that it has found that contractors are unable to contribute significantly to registration intake for at least two weeks after contract execution, due to the security checks that are required to be performed on the contractors. According to FEMA, to overcome this inability, FEMA entered into an Interagency Agreement with the Internal Revenue Service (IRS) where IRS would provide individuals who have already had background checks performed. This would include IRS providing FEMA call centers with 600 call center agents (2 shifts of 300) to support up to an additional 10,000 registration calls per day. In addition, IRS has committed surge staffing support of up to 3,000 employees for handling an additional 50,000 calls received per day in response to a catastrophic event. This process was described in FEMA?s readiness plan for the 2010 hurricane season. FEMA has taken steps to improve its customer service for potential disaster victims by obtaining additional call center agents and support staff through an Interagency Agreement with the IRS. These steps should assist FEMA's customer service readiness for future applicants during the immediate aftermath of hurricanes.

    Recommendation: The Secretary of Homeland Security should direct the Administrator of FEMA to assess the customer-service findings from this investigation and make improvements for future hurricane seasons in areas such as contractor readiness.

    Agency Affected: Department of Homeland Security


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