Now that it’s springtime and many people have begun home improvement projects, beware of disreputable contractors and scam artists who prey on unsuspecting homeowners.
Being the victim of a home improvement scam can be extremely costly to the homeowner. Tens of millions are lost to fraudulent schemes – which are one of the major types of fraud reported to consumer groups.
In the state of New Jersey alone in 2014, more than $2.1 million in penalties were assessed on 130 contractors who did shoddy work or left projects unfinished.
Consumer Reports magazine warns to be on the lookout for the following red flags:
1. He “just happens to be in the area.” Beware of anyone who knocks on your door and says they are working nearby and have extra materials.
2. The deal is good “today only.” Don’t allow yourself to be pressured into an immediate decision. Reputable contractors don’t do that.
3. You’re told your safety is at risk. Some scam artists will lead you to believe that you’re in danger if you don’t use their services. Contact authorities if you have concerns.
4. You have to pay upfront. If someone pressures you into paying a large amount before work can begin, it’s a sign that you may be ripped off or that he doesn’t have enough money to buy supplies. Also, beware if he says he can arrange financing through a lender he knows. You could end up with an unwanted home equity loan with a high interest rate and fees!
5. He lacks professionalism. If his truck is unmarked, he has no address or he acts in an unprofessional manner, don’t deal with him.
Some of the most common home improvement scams, according to Scambusters.org, are driveway sealant, chimney repair, hot-tar roofing and duct cleaning. Typically, sub-par materials are used or unnecessary repairs are recommended.
The Better Business Bureau recommends that homeowners always get three bids for a job and check on references. Since references could be false, ask for the names and addresses of the last three jobs they did.
Consumer Reports recommends the following guidelines to be ensure that the workers you hire to do your home improvement projects are reputable:
Get recommendations Ask friends, co-workers and neighbors. Don’t base your choice solely on an ad or a contractor that contacts you.
Check them out Check with consumer agencies such as the Better Business Bureau and state consumer agencies (www.us.gov/directory/stateconsumer) and online reviews.
Check their credentials Verify with the state that the contractor has the correct credentials.
Know your rights Under federal law, you have three days to cancel most contracts that are signed in your home or outside the contractor’s regular place of business. States have varying cancellation regulations.
Get everything in writing Demand a written contract, and get all warranties in writing too.
Before hiring a contractor, the Federal Trade Commission recommends, get written estimates from several firms, check to be sure they are licensed and ask a lot of questions, including:
- How many projects like mine have you done before? May I have a list of references? (Get names, addresses and phone numbers of at least three similar projects.)
- Will my project require a permit? (Beware if the contractor says permits aren’t required. Most places do require them.)
- What types of insurance do you carry? (They should have personal liabiity, worker’s compensation and property damage coverage. Ask for copies and make sure policies are current.)
- Will you be using subcontractors on this project? (If so, be sure they have current insurance coverage and licenses, too.)
Be sure to get a written contract and to keep records of phone calls, conversations and activities.
When it comes to payment, don’t pay cash and try to limit your down payment, the Federal Trade Commission says.
Know the limit for your final bill, and don’t make the final payment until you’ve inspected the job and are satisfied with it, you know all subcontractors have also been paid, you have written warranties for the work and the job site has been cleaned up.