FRAUD RESOURCE CENTER
If you are a homeowner, it’s not uncommon to have contractors show up on your doorstep uninvited. They say they happened to be doing some work in the neighborhood and noticed that your house needs some repairs too. They’ll offer to fix your roof, repave your driveway or perform other repairs or renovations, for what sounds like a great price.
When that happens, be wary: The smiling fix-it man or woman at your door might turn out to be an unscrupulous contractor or an outright con artist, out to fleece you with a home improvement scam.
Shady contractors will often ask for payment up front. Some simply disappear with your money. Others will do shoddy work or claim to have discovered some hidden problem in your house that needs immediate attention and significantly raises the cost (a dishonest variation of the sales tactic known as upselling).
Con artists look to prey on homeowners when they are vulnerable. If your house has been damaged by a storm or natural disaster, a scammer may show up and try to persuade you to sign over the payment from your insurance company. Some crooks seek out older homeowners with memory or cognitive problems, hoping to con them into paying multiple times for the same work.
Here’s what you can do to avoid being victimized by a home repair scam.
- Beware of contractors who say they stopped by because they just happen to be in your neighborhood. The good ones are usually too busy to roam around in search of work.
- Be skeptical if a contractor says he can offer a lower price because he’ll be using surplus material. That could mean he overbilled a previous customer or didn’t finish the work.
- Do insist on seeing references. The Federal Trade Commission (FTC) recommends asking past customers detailed questions, including whether the project was completed on time and if there were unexpected costs. The FTC also suggests asking the contractor if you can visit a job currently in progress.
- Do require a bid in writing, and compare bids from multiple contractors before agreeing to any work.
- Do check the Better Business Bureau (BBB) website to see contractors’ ratings and whether any complaints have been filed against them.
- Do get a written contract before you pay any money and before the work starts.
- Do read the fine print. The BBB says a contract should include a detailed description of the work, material costs, start and completion dates, and warranty information.
- Do verify, before you make the final payment, that all work has been completed to your satisfaction, any subcontractors or suppliers have been paid and the job site has been cleaned up.
- Don’t pay cash. The FTC recommends using a check or credit card, or arranging financing.
- Don’t put down a big deposit. The initial payment should be no more than a third of the total estimate, payable on the day the materials arrive.
- Don’t automatically take the lowest bid. Some contractors cut corners to come in lower than competitors, according to the BBB. The FTC recommends that if one contractor’s estimate is significantly less than those of competitors, ask why.
- Don’t let the contractor arrange financing for you. The FTC warns that you might be tricked into signing up for a home-equity loan with hefty fees or a high interest rate, or one in which the lender pays the contractor directly, giving him or her little incentive to finish the job or do it properly.
- Contact your state consumer-protection agency to report home improvement fraud.
- Check with your state's licensing agency to see if a contractor you are considering hiring is licensed.
- The Better Business Bureau lets you check out contractors in your area and file complaints if you’ve been scammed or poorly served.
- The National Association of the Remodeling Industry has an online directory of its members, who have pledged to follow the organization’s ethical guidelines.
Published: Dec. 3, 2018
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