When hiring a contractor for a home improvement project, watch out for these warning signs of contractor scams.
As a homeowner, you’ll likely need to hire a contractor occasionally. Finding a good contractor is not an easy task, despite it being a common advice. Recent research shows that one in ten Americans have been tricked by contractor scams. These scams come in different forms, but the elderly population, especially baby boomers, are the most vulnerable, with 15% of them reporting to have fallen victim. Millennials follow closely with a victimization rate of 13%.
Homeowners can fall prey to Contractor Scams, a common occurrence that can happen anywhere and to anyone, regardless of socioeconomic background. Con artists are always on the lookout for an opportunity for fast cash and often take advantage of people during home improvement projects. It is important to stay vigilant and watch out for any warning signs that could indicate a scam involving home improvement contractors. However, finding a trustworthy contractor can be challenging. Shockingly, recent research reveals that one in ten Americans has fallen victim to contractor scams. These scams come in different shapes and sizes, leaving homeowners exposed and at risk of losing their hard-earned money. Interestingly, baby boomers appear to be the most vulnerable to these fraudulent schemes, with 15% reporting being deceived. Millennials follow closely behind with a victimization rate of 13%. It is important to note that these scams are not restricted to any specific demographic or geographical area; they can occur anywhere and affect homeowners from all walks of life.
Con artists are always looking for ways to exploit individuals from different socioeconomic backgrounds whenever they see a chance for quick financial gain. Therefore, it is crucial for all homeowners, regardless of age or income level, to remain cautious and well-informed when hiring contractors for their home improvement projects. Not all contractors are scammers, but homeowners should exercise caution when choosing someone to work on their home. To avoid being the victim of a home contractor scam, homeowners should watch out for the following typical contractor scams and warning signs.
Usual Contractor Scams
Contractors can scam clients in various ways, and some methods are more deceitful than others. Overcharging for materials is one of the most common scams that frequently occur.
There are different types of contractor scams. One involves the contractor purchasing an excessive amount of unnecessary goods, charging the homeowner for the full cost, and then returning the materials once the work is over and keeping the money. Another type of deception entails the contractor billing the homeowner for materials left over from a prior project or replacing more affordable components without the client’s knowledge and pocketing the difference.
Another trick that contractors may employ is accepting a sizable advance payment, often in cash, and then vanishing. Some may offer a project at a lower price to land the job, only to drastically raise the price afterward.
Low-balling is another tactic. Some contractors will make low-ball promises and then find a way to significantly raise them, frequently making excuses about unanticipated issues that necessitate extra labor.
Lastly, dishonest contractors may suggest repairs that your house doesn’t genuinely need, frequently employing high-pressure sales techniques or door-to-door solicitation.
It’s unfortunate, but dishonest contractors often use deceptive tactics to take advantage of homeowners. They may show up unannounced if they notice something about your property that requires their “assistance”. Even if you have requested a contractor to provide a proposal, they may still use high-pressure tactics to force you into making quick decisions. Unless it’s an emergency, there is no need to rush your decisions. Take your time to compare options and obtain multiple quotes before making a final decision.
A Potential Contractor Scam: Warning Signs
When it comes to hiring a contractor, it’s important to be aware of possible scams. Fortunately, experts have identified several warning signs that you can watch out for to avoid falling prey to fraudsters.
One warning sign to be wary of is uninvited contractors who show up at your door claiming to be “in the neighborhood.” These individuals may pressure you to hire them immediately by offering discounts and demanding full cash payments upfront. Additionally, contractors who ask you to obtain work permits on your own could be unlicensed, which is another red flag to keep in mind.
It’s also concerning if a contractor provides verbal estimates instead of written ones, or if they ask for an unusually large down payment. While it’s common for some projects to require a deposit, it’s best to avoid anything greater than 20% of the project’s overall cost.
Finally, if a contractor provides a significantly lower estimate than others, this could be a sign of a scam. Keep in mind that prices charged by most contractors will generally be comparable and fall within a fair range. If a price seems too good to be true, it probably is.
How to Guard Against Home Improvement Contractor Scams
When hiring a contractor to improve your home, it is crucial to be diligent, particularly in the aftermath of a significant hurricane or any other large-scale disaster in your area. Criminals may perceive an opportunity to make quick profits when a storm severely damages properties in a region. Therefore, it is advisable to be extra cautious during such times. Whenever you begin your contractor search, always ask your friends or family members for recommendations. After that, check out their web presence.
Do they have a website? Are there online reviews available on sites like Google, the Better Business Bureau, or Yelp? Even the smallest businesses should have some internet presence, even if it’s just a social network page. If they don’t or if the reviews are overwhelmingly unfavorable, then it should be taken into consideration. However, be wary of a business that has only good reviews. Nobody is perfect all the time, so it’s possible that they bought fake reviews or even submitted them using false identities.
Along with requesting references for previous work or a portfolio, it is essential to demand proof of insurance and licensure from the contractor. Before proceeding, ensure that a thorough contract that specifies all the work is in place. Homeowners should always have a formal contract with all agreed-upon terms before any work is started or payments are made. Consumers should never sign a contract with blank spaces and should carefully read it before signing.
If you have a suspicion that you have been deceived, it is crucial to stop any payments immediately. Report the contractor to the Better Business Bureau and the state licensing agency, if they have a license. Collect all the contracts, written quotes, or correspondence you have with the person. You may need to consult with a lawyer for further advice.
Homeowners have the option to hire a lawyer and file a civil lawsuit to seek damages, even if their state offers a mechanism to file complaints through the Department of Consumer Protection. In some states, a contractor may be liable for twice the amount of damages claimed by the homeowner, as well as court costs and legal fees. Moreover, there are recovery platform companies that specialize in helping victims of scams to retrieve their money. These companies can be particularly useful in cases of contractor scams and other fraudulent businesses.
