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Investigators on lookout for price gougers in Fort McMurray

Restoration workers clean a downtown Fort McMurray shop on June 3, 2016 in Fort McMurray, Alberta.

COLE BURSTON/AFP/Getty Images

Investigators are hitting the streets of Fort McMurray to smoke out evidence of businesses and landlords taking advantage of the fire crisis and residents' vulnerability to jack up rates and rents.

The regional government caught at least one hotelier tripling room rates as thousands of evacuees, and support-service workers, flowed back into town on Wednesday after a month away. Civic-minded local business people have also sounded the alarm about furnace-duct cleaners and others demanding exorbitant fees.

"We'll have two investigative teams on the ground as of tomorrow," said Stephen Carr, deputy director of emergency management for the Regional Municipality of Wood Buffalo, which includes the city. "They will be able to follow these up. We'll have at least one of them positioned at one of the information centres to take public complaints, and then they will also be focused in on any issues that we … have identified." The municipality has set up a tip line as well, so residents can report shady dealings by anyone who would profit from the misfortune of others.

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Mr. Carr declined to identify the hotel that raised its room rates by 200 per cent.

This week, the municipal and provincial governments used their power under the state of emergency, in place since the wildfire devastation last month, to prohibit any hikes to rates and rents from those in place on April 30. Such practices could land hoteliers, work camp operators and landlords fines of $10,000 per violation.

The idea is to nip unscrupulous practices in the bud as tens of thousands of residents begin the long path to recovery, one that will include a parade of housing contractors, sub-trades and insurance representatives, as well as retailers that offer fans, refrigerators, carpeting and countless other staples for returning to a normal life in Fort McMurray.

Gouging for products large and small was a frequent complaint during previous Alberta disasters, including the southern Alberta floods of 2013 and the wildfire that tore through Slave Lake in 2011. Locals here acknowledge Fort McMurray was once seen as the Wild West for business practices, but the recent oil-price slump had sent many who arrived to make a quick buck packing. Now, the vast majority of businesses want to contribute to the recovery.

An influx of contractors from outside the region, and complaints of sky-high prices, has one local plumbing and heating contractor hopping mad. Glen Nichols, who owns Black Iron Gasfitting Ltd., said his clients have told him that some furnace-cleaning outfits have charged as much as $1,500 for a job that previously cost $250. It's a high-demand service.

"In the last week and a half, I've probably seen 100 homes that have got smoke damage, not because of the fire but because of the air intake for the air-conditioning systems that sucked all the fumes into the house," Mr. Nichols said. "This is why duct cleaners are coming in. I'm not going to say the word scam, but people need to qualify their duct-cleaning company before they bring them in."

Residents must vet providers stringently, despite their desire to put their homes back in livable shape, demanding references, business licences, insurance documentation and workers' compensation accreditation, he said.

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He said he discussed with local councillors the idea of the municipality demanding the credentials, but he realizes it would take a while to put such a program in place with the recovery just under way.

"Unfortunately, you have these early entries happening now, and they don't have the manpower to basically sit at the gate and demand a licence and tickets before they let you into the city," Mr. Nichols said. "So that puts a lot of homeowners at risk."

Mr. Carr said such instances are more difficult for authorities to track than with pricing violations in accommodations. Insurance companies, he said, should be compiling approved lists of contractors. But if there are fly-by-night operators about, the provincial government will seek to inform residents about avoiding them by demanding credentials and consulting the Better Business Bureau.

Stuart Sutherland, whose company provides residential and commercial mechanical upkeep, said he's not changed his rates for clients, and took care of their buildings during the evacuation.

"If we were to raise rates it would be awful. We'd get a reputation pretty quick. Social media is particularly vicious in Fort McMurray. There's a lot of shaming and stuff like that," he said.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general  topics. More

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