California residents are leaving en masse: how scammers profit from moving

Because of housing prices and wildfires, people are leaving California in droves. The relocation business thrives on bringing its own problems, writes The Guardian.

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The outflow of people from California has been going on for several years, but in 2020, the rise of teleworking, the temptation to live in a cheaper place, and unprecedented wildfires have accelerated this trend. As a result, the relocation business in the San Francisco Bay Area is booming, but this surge has been accompanied by a number of problems.

Available trucks are hard to come by, outbound prices are skyrocketing, and the supply market—with high start-up costs and the need for a carrier to obtain a license—is slow to respond.

The scarcity has created an opportunity for an underground economy with scammers taking advantage of the desperation of people fleeing the state.

The relocation companies said their summer schedule had been booked months in advance. And in the fall, things continued, although in normal years there is a lull in the industry after the children go to school. A spokesman for the transportation company Gentle Giant says there were three times as many crossings from San Francisco in September 2020 than a year earlier.

Even U-Haul stores, the truck rental retailer with the largest fleet in the U.S., are running short of trucks. Due to the massive relocation, there is a constant shortage of returned cars. The shortage has skyrocketed truck prices for one-way out-of-town trips.

“For every family that moves to California, two move out,” says Mark Perry, a professor of economics and finance at the University of Michigan who has been studying the U.S. migration market for the past several years. “U-Haul sets prices based on the imbalance they see, and now they have a shortage of trucks in San Francisco.”

U-Haul regularly changes its truck prices, but Perry has been noticing the trend for a long time. He recently noticed that trucks going from Phoenix to San Francisco cost $311 to move, and $2500 the other way, about eight times more. He checked cities in other popular destinations for Californians, including Texas, Washington and Nevada, and found that outbound rates were all exponentially higher than inbound rates.

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High demand and prices have created ideal market conditions for operation. Fraudsters actively profit from people.

“There are cases where the mover takes possession of items after the consumer has agreed on a price, and then does not give the items back unless the consumer pays much more than the agreed upon price,” said Yeafana La Marr, acting chief of the California Bureau of Home Improvement and Services, which regulates shipping. industry. “Some people just take things and disappear.”

The agency is also trying to deal with newcomers who enter a booming market without the licensing or insurance required by the state. Legitimate carriers complete an application, pass a test, background checks, and pay a $ 500 license fee, and they must prove they have the necessary resources to operate.

“Unlicensed activity is a serious problem in the home moving industry and causes great harm to consumers,” La Marr says. “This is an accident-prone industry, and customers could be on the hook if they unknowingly hire a mover who doesn’t have liability or workers’ compensation insurance.”

Clandestine activities are difficult to track, but La Marr says the bureau conducts investigations based on advice from the public or other agencies, including local law enforcement. Compared to last year, the number of consumer complaints about movers increased by 74%. When an unauthorized carrier is caught, the state will require it to obtain a license, but some violators are punished with fines of up to $ 10 and sometimes jail time.

Unlicensed carriers are also making it harder for legitimate carriers to compete with lower bids from less experienced staff and more flexible timelines.

Transport companies are struggling to keep up with the required pace. A spokesperson for Gentle Giant said several movers took voluntary leave due to family responsibilities and fears of contracting the virus when the Covid-19 crisis hit, limiting already strained resources.

“We work on the front lines and face different conditions every day, so it's high risk,” La Marr says. “Due to Covid, due to high demand, we can’t serve everyone at the time they want.”

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He was disappointed to see customers leaning towards fast service delivery and low prices, rather than relying on reliable suppliers. This can get expensive.

“It's a weird scenario where you take everything you have, give it to someone you've never met before, and they close the truck doors and drive away,” he says. “You just hope they get to your new location.”

Chris Meyer, vice president of Macy's Movers, a family-owned company that has been in the Bay Area for over 100 years, says he's trying to guide potential customers through the steps legitimate companies are taking to show them why a shockingly low price can end up costing more. He said the stress is much higher this year.

"It's horrible. “Customers call us in tears,” he says. - They're scared. There are movers who did not show up for the move. There are movers who don't call them back. They can't even find U-Haul trucks. I have never seen such serious panic in my life.”

But his calendar is scheduled for several weeks. People who didn't plan ahead have to wait.

“Consumers just need to be aware of this,” he says. “Scammers know that the easiest way to catch a scam is a client who desperately wants to move tomorrow.”

Mayer, who has lived in California all his life, says he understands why people leave. As his business is still thriving during this usually dead time of the year, he sees no sign that departure is slowing.

"It should calm down, but it's still crazy," he says.

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